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HUD Procurement Handbook 7460.8 REV 2
This handbook is originally from the U.S. Department of Housing and Urban Development (HUD)

                                                 Handbook No. 7460.8 REV 2

This Procurement Policy complies with the Annual Contributions Contract (ACC) between 
Felton  Housing Authority (FHA) and the HUD, Federal Regulations at 24 CFR 85.36, the 
procurement standards of the Procurement Handbook for PHAs, HUD Handbook 7460.8, Rev 2, 
and applicable State and Local laws. 



The FHA shall: provide for a procurement system of quality and integrity; provide for the fair 
and equitable treatment of all persons or firms involved in purchasing by the FHA; ensure that 
supplies and services (including construction) are procured efficiently, effectively, and at the 
most favorable prices available to the FHA; promote competition in contracting; and assure that 
FHA purchasing actions are in full compliance with applicable Federal standards, HUD 
regulations, State, and local laws.


This Procurement Policy applies to all procurement actions of the Authority, regardless of the 
source of funds, except as noted under “exclusions,” below.  However, nothing in this Policy 
shall prevent the FHA from complying with the terms and conditions of any grant, contract, gift 
or bequest that is otherwise consistent with the law. When both HUD and non-Federal grant 
funds are used for a project, the work to be accomplished with the funds should be separately 
identified prior to procurement so that appropriate requirements can be applied, if necessary. If it 
is not possible to separate the funds, HUD procurement regulations shall be applied to the total 
project. If funds and work can be separated and work can be completed by a new contract, then 
regulations applicable to the source of funding may be followed. 


The term “procurement,” as used in this Policy, includes the procuring, purchasing, leasing, or 
renting of: (1) goods, supplies, equipment, and materials, (2) construction and maintenance; 
consultant services, (3) Architectural and Engineering (A/E) services, (4) Social Services, and (5) 
other services. 


This policy does not govern administrative fees earned under the Section 8 voucher program, the 
award of vouchers under the Section 8 program, the execution of landlord Housing Assistance 
Payments contracts under that program, or non-program income, e.g., fee-for-service revenue 
under 24 CFR Part 990.  These excluded areas are subject to applicable State and local 

Changes in Laws and Regulations

In the event an applicable law or regulation is modified or eliminated, or a new law or regulation 
is adopted, the revised law or regulation shall, to the extent inconsistent with these Policies, 
automatically supersede these Policies. 



                                                          Handbook No. 7460.8 REV 2  
Public Access to Procurement Information

Most procurement information that is not proprietary is a matter of public record and shall be 
available to the public to the extent provided in the __________(State) Freedom of Information 



The FHA hereby establishes this code of conduct regarding procurement issues and actions and 
shall implement a system of sanctions for violations. This code of conduct, etc., is consistent 
with applicable Federal, State, or local law.

Conflicts of Interest  

No employee, officer, Board member, or agent of the FHA shall participate directly or indirectly 
in the selection, award, or administration of any contract if a conflict of interest, either real or 
apparent, would be involved. This type of conflict would be when one of the persons listed below 
has a financial or any other type of interest in a firm competing for the award:

A.  An employee, officer, Board member, or agent involved in making the award;

B.  His/her relative (including father, mother, son, daughter, brother, sister, uncle, aunt, first 
    cousin, nephew, niece, husband, wife, father-in-law, mother-in-law, son-in-law, daughter-in-
    law, brother-in-law, sister-in-law, stepfather, stepmother, stepson, stepdaughter, stepbrother, 
    stepsister, half brother, or half sister);

C.  His/her partner; or

D.  An organization which employs or is negotiating to employ, or has an arrangement 
    concerning prospective employment of any of the above.

Gratuities, Kickbacks, and Use of Confidential Information  

No officer, employee, Board member, or agent shall ask for or accept gratuities, favors, or items 
of more than $25 in value from any contractor, potential contractor, or party to any subcontract, 
and shall not knowingly use confidential information for actual or anticipated personal gain. 

Prohibition Against Contingent Fees  

Contractors wanting to do business with the FHA must not hire a person to solicit or secure a 
contract for a commission, percentage, brokerage, or contingent fee, except for bona fide 
established commercial selling agencies.



                                                          Handbook No. 7460.8 REV 2

Planning is essential to managing the procurement function properly. Hence, the FHA will 
periodically review its record of prior purchases, as well as future needs, to: find patterns of 
procurement actions that could be performed more efficiently or economically;  maximize 
competition and competitive pricing among contracts and decrease the FHA’s procurement costs; 
reduce FHA administrative costs; ensure that supplies and services are obtained without any need 
for re-procurement, e.g., resolving bid protests; and minimize errors that occur when there is 
inadequate lead time. Consideration should be given to storage, security, and handling 
requirements when planning the most appropriate purchasing actions. 


Petty Cash Purchases  

Purchases under $50 may be handled through the use of a petty cash account. Petty Cash 
Accounts may be established in an amount sufficient to cover small purchases made during a 
reasonable period, e.g., one month. For all Petty Cash Accounts, the FHA shall ensure that 
security is maintained and only authorized individuals have access to the account. These accounts 
should be reconciled and replenished periodically. 

Small Purchase Procedures  

For any amounts above the Petty Cash ceiling, but not exceeding $100,000, the FHA may use 
small purchase procedures. Under small purchase procedures, the FHA shall obtain a reasonable 
number of quotes (preferably three); however, for purchases of  less than $2,000, also known as 
Micro Purchases, only one quote is required provided the quote is considered reasonable. To the 
greatest extent feasible, and to promote competition, small purchases should be distributed 
among qualified sources. Quotes may be obtained orally (either in person or by phone), by fax, in 
writing, or through e-procurement. Award shall be made to the qualified vendor that provides the 
best value to the FHA. If award is to be made for reasons other than lowest price, documentation 
shall be provided in the contract file. The FHA shall not break down requirements aggregating 
more than the small purchase threshold (or the Micro Purchase threshold) into several purchases 
that are less than the applicable threshold merely to: (1) permit use ofthe small purchase 
procedures or (2) avoid any requirements that applies to purchases that exceed the Micro 
Purchase threshold.

Sealed Bids 

Sealed bidding shall be used for all contracts that exceed the small purchase threshold and that 
are not competitive proposals or non-competitive proposals, as these terms are defined in this 
document. Under sealed bids, the PHA publicly solicits bids and awards a firm fixed-price 
contract (lump sum or unit price) to the responsible bidder whose bid, conforming with all the 
material terms and conditions of the IFB, is the lowest in price. Sealed bidding is the preferred 
method for procuring construction, supply, and non-complex service contracts that are expected 
to exceed $100,000. 


                                                          Handbook No. 7460.8 REV 2 
A.  Conditions for Using Sealed Bids. FHA shall use the sealed bid method if the following 
    conditions are present:  a complete, adequate, and realistic statement of work, specification, 
    or purchase description is available; two or more responsible bidders are willing and able to 
    compete effectively for the work; the contract can be awarded based on a firm fixed price; 
    and the selection of the successful bidder can be made principally on the lowest price. 

B.  Solicitation and Receipt of Bids. An IFB is issued which includes the specifications and all 
    contractual terms and conditions applicable to the procurement, and a statement that award 
    will be made to the lowest responsible and responsive bidder whose bid meets the 
    requirements of the solicitation. The IFB must state the time and place for both receiving the 
    bids and the public bid opening. All bids received will be date and time-stamped and stored 
    unopened in a secure place until the public bid opening. A bidder may withdraw the bid at 
    any time prior to the bid opening. 

C.  Bid Opening and Award. Bids shall be opened publicly. All bids received shall be recorded 
    on an abstract (tabulation) of bids, and then made available for public inspection. If equal low 
    bids are received from responsible bidders, selection shall be made by drawing lots or other 
    similar random method. The method for doing this shall be stated in the IFB. If only one 
    responsive bid is received from a responsible bidder, award shall not be made unless the 
    price can be determined to be reasonable, based on a cost or price analysis.

D.  Mistakes in Bids. Correction or withdrawal of bids may be permitted, where appropriate, 
    before bid opening by written or telegraphic notice received in the office designated in the 
    IFB prior to the time set for bid opening. After bid opening, corrections in bids may be 
    permitted only if the bidder can show by clear and convincing evidence that a mistake of a 
    nonjudgmental character was made, the nature of the mistake, and the bid price actually 
    intended. A low bidder alleging a nonjudgmental mistake may be permitted to withdraw its 
    bid if the mistake is clearly evident on the face of the bid document but the intended bid is 
    unclear or the bidder submits convincing evidence that a mistake was made. All decisions to 
    allow correction or withdrawal of a bid shall be supported by a written determination signed 
    by the Contracting Officer. After bid opening, changes in bid prices or other provisions of 
    bids prejudicial to the interest of the FHA or fair competition shall not be 

Competitive Proposals

Unlike sealed bidding, the competitive proposal method permits: consideration of technical 
factors other than price; discussion with offerors concerning offers submitted; negotiation of 
contract price or estimated cost and other contract terms and conditions; revision of proposals 
before the final contractor selection; and the withdrawal of an offer at any time up until the point 
of award. Award is normally made on the basis of the proposal that represents the best overall 
value to the PHA, considering price and other factors, e.g., technical expertise, past experience, 
quality of proposed staffing, etc., set forth in the solicitation and not solely the lowest price. 

A.  Conditions for Use. Where conditions are not appropriate for the use of sealed bidding, 
    competitive proposals may be used. Competitive proposals are the preferred method for 
    procuring professional services that will exceed the small purchase threshold. 



                                                          Handbook No. 7460.8 REV 2
B.  Form of Solicitation. Other than A/E services, competitive proposals shall be solicited 
    through the issuance of a RFP. The RFP shall clearly identify the importance and relative 
    value of each of the evaluation factors as well as any subfactors and price. A mechanism for 
    fairly and thoroughly evaluating the technical and price proposals shall be established before 
    the solicitation is issued. Proposals shall be handled so as to prevent disclosure of the number 
    of offerors, identity of the offerors, and the contents of their proposals until after award. The 
    FHA may assign price a specific weight in the evaluation criteria or the FHA may consider 
    price in conjunction with technical factors; in either case, the method for evaluating price 
    shall be established in the RFP.

C.  Evaluation. The proposals shall be evaluated only on the criteria stated in the RFP. Where 
    not apparent from the evaluation criteria, the FHA shall establish an Evaluation Plan for each 
    RFP. Generally, all RFPs shall be evaluated by an appropriately appointed Evaluation 
    Committee. The Evaluation Committee shall be required to disclose any potential conflicts of 
    interest and to sign a Non-Disclosure statement. An Evaluation Report, summarizing the 
    results of the evaluation, shall be prepared prior to award of a contract. 

D.  Negotiations. Negotiations shall be conducted with all offerors who submit a proposal 
    determined to have a reasonable chance of being selected for award, unless it is determined 
    that negotiations are not needed with any of the offerors. This determination is based on the 
    relative score of the proposals as they are evaluated and rated in accordance with the 
    technical and price factors specified in the RFP. These offerors shall be treated fairly and 
    equally with respect to any opportunity for negotiation and revision of their proposals. No 
    offeror shall be given any information about any other offeror’s proposal, and no offeror shall 
    be assisted in bringing its proposal up to the level of any other proposal. A common deadline 
    shall be established for receipt of proposal revisions based on negotiations. Negotiations are 
    exchanges (in either competitive or sole source environment) between the PHA and offerors 
    that are undertaken with the intent of allowing the offeror to revise its proposal. These 
    negotiations may include bargaining. Bargaining includes persuasion, alteration of 
    assumptions and positions, give-and-take, and may apply to price, schedule, technical 
    requirements, type of contract or other terms of a proposed contract. When negotiations are 
    conducted in a competitive acquisition, they take place after establishment of the competitive 
    range and are called discussions. Discussions are tailored to each offeror’s proposal, and shall 
    be conducted by the contracting officer with each offeror within the competitive range. The 
    primary object of discussions is to maximize the FHA’s ability to obtain best value, based on 
    the requirements and the evaluation factors set forth in the solicitation. The contracting 
    officer shall indicate to, or discuss with, each offeror still being considered for award, 
    significant weaknesses, deficiencies, and other aspects of its proposal (such as cost, price, 
    technical approach, past performance, and terms and conditions) that could, in the opinion of 
    the contracting officer, be altered or explained to enhance materially the proposer’s potential 
    for award. The scope and extent of discussions are a matter of the contracting officer’s 
    judgment. The contracting officer may inform an offeror that its price is considered by the 
    PHA to be too high, or too low, and reveal the results of the analysis supporting that 
    conclusion. It is also permissible to indicate to all offerors the cost or price that the 
    government’s price analysis, market research, and other reviews have identified as 
    reasonable. “Auctioning” (revealing one offeror’s price in an attempt to get another offeror to 
    lower their price) is prohibited. 


                                                          Handbook No. 7460.8 REV 2
E.  Award. After evaluation of the revised proposals, if any, the contract shall be awarded to the 
    responsible firm whose technical approach to the project, qualifications, price and/or any 
    other factors considered, are most advantageous to the FHA provided that the price is within 
    the maximum total project budgeted amount established for the specific property or activity. 

F.  A/E Services. The FHA must contract for A/E services using QBS procedures, utilizing a 
    RFQ. Sealed bidding shall not be used for A/E solicitations. Under QBS procedures, 
    competitors’ qualifications are evaluated and the most qualified competitor is selected, 
    subject to negotiation of fair and reasonable compensation. Price is not used as a selection 
    factor under this method. QBS procedures shall not be used to purchase other types of 
    services, though architectural/engineering firms are potential sources. 

Noncompetitive Proposals

A.  Conditions for Use. Procurement by noncompetitive proposals (sole-source) may be used 
    only when the award of a contract is not feasible using small purchase procedures, sealed 
    bids, cooperative purchasing, or competitive proposals, and if one of the following applies:

    1.  The item is available only from a single source, based on a good faith review of available 

    2.  An emergency exists that seriously threatens the public health, welfare, or safety, or 
        endangers property, or would otherwise cause serious injury to the FHA, as may arise by 
        reason of a flood, earthquake, epidemic, riot, equipment failure, or similar event. In such 
        cases, there must be an immediate and serious need for supplies, services, or construction 
        such that the need cannot be met through any of the other procurement methods, and the 
        emergency procurement shall be limited to those supplies, services, or construction 
        necessary simply to meet the emergency;

    3.  HUD authorizes the use of noncompetitive proposals; or

    4.  After solicitation of a number of sources, competition is determined inadequate.

B.  Justification. Each procurement based on noncompetitive proposals shall be supported by a 
    written justification for the selection of this method. The justification shall be approved in 
    writing by the responsible Contracting Officer. Poor planning or lack of planning is not 
    justification for emergency or sole-source procurements. The justification, to be included in 
    the procurement file, should include the following information:

    1.  Description of the requirement;

    2.	History of prior purchases and their nature (competitive vs. noncompetitive);

    3.	The specific exception in 24 CFR 85.36(d)(4)(i)(A) through (D) which applies;

    4.	Statement as to the unique circumstances that require award by noncompetitive proposals;

    5.	Description of the efforts made to find competitive sources (advertisement in trade 
        journals or local publications, phone calls to local suppliers, issuance of a written 
        solicitation, etc.);

    6.	Statement as to efforts that will be taken in the future to promote competition for the 

    7.	Signature by the Contracting Officer’s supervisor (or someone above the level of the 
        Contracting Officer); and



                                                          Handbook No. 7460.8 REV 2
    8.  Price Reasonableness. The reasonableness of the price for all procurements based on 
        noncompetitive proposals shall be determined by performing an analysis, as described in 
        this Policy. 

Cooperative Purchasing/Intergovernmental Agreements  

The FHA may enter into State and/or local cooperative or intergovernmental agreements to 
purchase or use common supplies, equipment, or services. The decision to use an interagency 
agreement instead of conducting a direct procurement shall be based on economy and efficiency. 
If used, the interagency agreement shall stipulate who is authorized to purchase on behalf of the 
participating parties and shall specify inspection, acceptance, termination, payment, and other 
relevant terms and conditions. The FHA may use Federal or State excess and surplus property 
instead of purchasing new equipment and property if feasible and if it will result in a reduction of 
project costs. The goods and services obtained under a cooperative purchasing agreement must 
have been procured in accordance with 24 CFR 85.36.


For all purchases above the Micro Purchase threshold, the FHA shall prepare an ICE prior to 
solicitation. The level of detail shall be commensurate with the cost and complexity of the item 
to be purchased.


The FHA shall require assurance that, before entering into a contract, the price is reasonable, in 
accordance with the following instructions. 

Petty Cash and Micro Purchases 

No formal cost or price analysis is required. Rather, the execution of a contract by the 
Contracting Officer (through a Purchase Order or other means) shall serve as the Contracting 
Officer’s determination that the price obtained is reasonable, which may be based on the 
Contracting Officer’s prior experience or other factors. 

Small Purchases 

A comparison with other offers shall generally be sufficient determination of the reasonableness 
of price and no further analysis is required. If a reasonable number of quotes is not obtained to 
establish reasonableness through price competition, the Contracting Officer shall document price 
reasonableness through other means, such as prior purchases of this nature, catalog prices, the 
Contracting Officer’s personal knowledge at the time of purchase, comparison to the ICE, or any 
other reasonable basis. 

Sealed Bids 

The presence of adequate competition should generally be sufficient to establish price 
reasonableness. Where sufficient bids are not received, and when the bid received is substantially 
more than the ICE, and where the FHA cannot reasonably determine price reasonableness, the 
FHA must conduct a cost analysis, consistent with federal guidelines, to ensure that the price 
paid is reasonable. 



                                                          Handbook No. 7460.8 REV 2
Competitive Proposals  

The presence of adequate competition should generally be sufficient to establish price 
reasonableness. Where sufficient bids are not received, the FHA must compare the price with the 
ICE. For competitive proposals where prices cannot be easily compared among offerors, where 
there is not adequate competition, or where the price is substantially greater than the ICE, the 
FHA must conduct a cost analysis, consistent with Federal guidelines, to ensure that the price 
paid is reasonable.

Contract Modifications 

A cost analysis, consistent with federal guidelines, shall be conducted for all contract 
modifications for projects that were procured through Sealed Bids, Competitive Proposals, or 
Non-Competitive Proposals, or for projects originally procured through Small Purchase 
procedures and the amount of the contract modification will result in a total contract price in 
excess of $100,000. 


Method of Solicitation

A.  Petty Cash and Micro Purchases. The FHA may contact only one source if the price is 
    considered reasonable.

B.  Small Purchases. Quotes may be solicited orally, through fax, or by any other reasonable 

C.  Sealed Bids and Competitive Proposals. Solicitation must be done publicly. The FHA must 
    use one or more following solicitation methods, provided that the method employed provides 
    for meaningful competition.

    1.  Advertising in newspapers or other print mediums of local or general circulations.

    2.  Advertising in various trade journals or publications (for construction).

    3.  E-Procurement. The FHA may conduct its public procurements through the Internet using 
        e-procurement systems. However, all e-procurements must otherwise be in compliance 
        with 24 CFR 85.36, State and local requirements, and the Authority’s procurement policy. 

Time Frame 

For purchases of more than $100,000, the public notice should run not less than once each week 
for two consecutive weeks. 


Notices/advertisements should state, at a minimum, the place, date, and time that the bids or 
proposals are due, the solicitation number, a contact who can provide a copy of, and information 
about, the solicitation, and a brief description of the needed items(s). 


                                                          Handbook No. 7460.8 REV 2
Time Period for Submission of Bids

A minimum of 30 days shall generally be provided for preparation and submission of sealed bids 
and 15 days for competitive proposals. However, the Executive Director may allow for a shorter 
period under extraordinary circumstances.

Cancellation of Solicitations

A.  An IFB, RFP, or other solicitation may be cancelled before bids/offers are due if:  

    1.  The supplies, services or construction is no longer required; 

    2.  The funds are no longer available; 

    3.  Proposed amendments to the solicitation are of such magnitude that a new solicitation 
        would be best; or 

    4. Other similar reasons. 

B.  A solicitation may be cancelled and all bids or proposals that have already been received may 
    be rejected if:

    1.	The supplies or services (including construction) are no longer required;

    2.  Ambiguous or otherwise inadequate specifications were part of the solicitation;

    3.  All factors of significance to the FHA were not considered; 

    4.  Prices exceed available funds and it would not be appropriate to adjust quantities to come 
        within available funds;

    5.  There is reason to believe that bids or proposals may not have been independently 
        determined in open competition, may have been collusive, or may have been submitted in 
        bad faith; or

    6.  For good cause of a similar nature when it is in the best interest of the FHA.

C.  The reasons for cancellation shall be documented in the procurement file and the reasons for 
    cancellation and/or rejection shall be provided upon request.

D.  A notice of cancellation shall be sent to all bidders/offerors solicited and, if appropriate, shall 
    explain that they will be given an opportunity to compete on any resolicitation or future 
    procurement of similar items.

E.  If all otherwise acceptable bids received in response to an IFB are at unreasonable prices an 
    analysis should be conducted to see if there is a problem in either the specifications or the 
    FHA’s cost estimate. If both are determined adequate and if only one bid is received and the 
    price is unreasonable, the Contracting Officer may cancel the solicitation and either

    1.  Re-solicit using an RFP; or

    2.  Complete the procurement by using the competitive proposal method. The Contracting 
        Officer must determine, in writing, that such action is appropriate, must inform all 
        bidders of the FHA’s intent to negotiate, and must give each bidder a reasonable 
        opportunity to negotiate.


                                                          Handbook No. 7460.8 REV 2 
F.  If problems are found with the specifications, FHA should cancel the solicitation, revise 
    the specifications and resolicit using an IFB. 

Credit (or Purchasing) Cards

Credit card usage should follow the rules for all other small purchases. For example, the 
Contracting Officer may use a credit card for Micro Purchases without obtaining additional 
quotes provided the price is considered reasonable. However, for amounts above the Micro 
Purchase level, the Contracting Officer would generally need to have obtained a reasonable 
number of quotes before purchasing via a credit card. 

When using credit cards, the FHA should adopt reasonable safeguards to assure that they are 
used only for intended purposes (for instance, limiting the types of purchases or the amount of 
purchases that are permitted with credit cards). 


The standards under this section apply to construction contracts that exceed $100,000. There are 
no bonding requirements for small purchases or for competitive proposals. The FHA may require 
bonds in these latter circumstances when deemed appropriate; however, non-construction 
contracts should generally not require bid bonds. 

A.  Bid Bonds. For construction contracts exceeding $100,000, offerors  shall be required to 
    submit a bid guarantee from each bidder equivalent to 5% of the bid price.

B.  Payment Bonds. For construction contracts exceeding $100,000, the successful bidder shall 
    furnish an assurance of completion. This assurance may be any one of the following four:

   1.  A performance and payment bond in a penal sum of 100% of the contract price; or 

   2.  Separate performance and payment bonds, each for 50 % or more of the contract price; or

   3.  A 20 % cash escrow; or

   4.  A 25 % irrevocable letter of credit.

C.	These bonds must be obtained from guarantee or surety companies acceptable to the U. S.
    Government and authorized to do business in the State where the work is to be performed. 
    Individual sureties shall not be considered. U. S. Treasury Circular Number 570 lists 
    companies approved to act as sureties on bonds securing Government contracts, the 
    maximum underwriting limits on each contract bonded, and the States in which the company 
    is licensed to do business. Use of companies on this circular is mandatory.


Contractor Responsibility  

PHAs shall not award any contract until the prospective contractor, i.e., low responsive bidder, or 
successful offeror, has been determined to be responsible. A responsible bidder/offeror must:

A.  Have adequate financial resources to perform the contract, or the ability to obtain them;


                                                          Handbook No. 7460.8 REV 2
B.  Be able to comply with the required or proposed delivery or performance schedule, taking 
    into consideration all the bidder’s/offeror’s existing commercial and governmental business 

C.  Have a satisfactory performance record;

D.  Have a satisfactory record of integrity and business ethics;

E.  Have the necessary organization, experience, accounting and operational controls, and 
    technical skills, or the ability to obtain them;

F.  Have the necessary production, construction, and technical equipment and facilities, or the 
    ability to obtain them; and,

G.  Be otherwise qualified and eligible to receive an award under applicable laws and 
    regulations, including not be suspended, debarred or under a HUD-imposed LDP.

If a prospective contractor is found to be non-responsible, a written determination of non-
responsibility shall be prepared and included in the official contract file, and the prospective 
contractor shall be advised of the reasons for the determination.

Suspension and Debarment  

Contracts shall not be awarded to debarred, suspended, or ineligible contractors. Contractors may be 
suspended, debarred, or determined to be ineligible by HUD in accordance with HUD 
regulations (24 CFR Part 24) or by other Federal agencies, e.g., Dept of Labor for violation of 
labor regulations, when necessary to protect housing authorities in their business dealings.

Vendor Lists  

All interested businesses shall be given the opportunity to be included on vendor mailing lists. 
Any lists of persons, firms, or products which are used in the purchase of supplies and services 
(including construction) shall be kept current and include enough sources to ensure competition. 


Contract Types

Any type of contract which is appropriate to the procurement and which will promote the best 
interests of the FHA may be used, provided the cost -plus-a-percentage-of-cost and 
percentage-of-construction-cost methods are not used. All solicitations and contracts shall 
include the clauses and provisions necessary to define the rights and responsibilities of both the 
contractor and FHA. 

For all cost reimbursement contracts, FHA must include a written determination as to why no 
other contract type is suitable. Further, the contract must include a ceiling price that the 
contractor exceeds at its own risk.


Options for additional quantities or performance periods may be included in contracts, provided 


                                                          Handbook No. 7460.8 REV 2 
A.  The option is contained in the solicitation;

B.  The option is a unilateral right of the Authority; 

C.  The contract states a limit on the additional quantities and the overall term of the contract; 

D.  The options are evaluated as part of the initial competition; 

E.  The contract states the period within which the options may be exercised; 

F.  The options may be exercised only at the price specified in or reasonably determinable from 
    the contract; and 

G.  The options may be exercised only if determined to be more advantageous to  FHA than 
    conducting a new procurement.


All contracts should identify the contract pricing arrangement as well as other pertinent terms and 
conditions, as determined by the FHA. 

Additionally, the forms HUD-5369, 5369-A, 5369-B, 5369, 5370, 5370-C, and 51915-A , which 
contain all HUD-required clauses and certifications for contracts of more than $100,000, 
as well as any forms/clauses as required by HUD for small purchases, shall be used in all corresponding 
solicitations and contracts issued by this Authority. 


The FHA shall maintain a system of contract administration designed to ensure that contractors 
perform in accordance with their contracts. These systems shall provide for inspection of 
supplies, services, or construction, as well as monitoring contractor performance, status reporting 
on major projects including construction contracts, and similar matters. For cost-reimbursement 
contracts, costs are allowable only to the extent that they are consistent with the cost principles in 
HUD Handbook 2210.18.



All specifications shall be drafted so as to promote overall economy for the purpose intended and to 
encourage competition in satisfying FHA needs. Specifications shall be reviewed prior to 
issuing any solicitation to ensure that they are not unduly restrictive or represent unnecessary or 
duplicative items. Function or performance specifications are preferred. Detailed product 
specifications shall be avoided whenever possible. Consideration shall be given to consolidating 
or breaking out procurements to obtain a more economical purchase. For equipment purchases, a 
lease versus purchase analysis should be performed to determine the most economical form of 


The following types of specifications shall be avoided:  


                                                          Handbook No. 7460.8 REV 2
A.  geographic restrictions not mandated or encouraged by applicable Federal law (except for 
    A/Econtracts, which may include geographic location as a selection factor if adequate 
    competition is available); 

B.  brand name specifications (unless the specifications list the minimum essential characteristics 
    and standards to which the item must conform to satisfy its intended use). 

Nothing in this procurement policy shall preempt any State licensing laws. Specifications shall be 
reviewed to ensure that organizational conflicts of interest do not occur.



It is FHA policy to resolve all contractual issues informally and without litigation. Disputes will 
not be referred to HUD unless all administrative remedies have been exhausted. When 
appropriate, a mediator may be used to help resolve differences. 

Informal Appeals Procedure 

The FHA shall adopt an informal bid protest/appeal procedure for contracts of $100,000 or less. 
Under these procedures, the bidder/contractor may request to meet with the appropriate Contract 

Formal Appeals Procedure 

A formal appeals procedure shall be established for solicitations/contracts of more than 

A.  Bid Protest. Any actual or prospective contractor may protest the solicitation or award of a 
    contract for serious violations of the principles of this Policy. Any protest against a 
    solicitation must be received before the due date for the receipt of bids or proposals, and any 
    protest against the award of a contract must be received within ten (10) calendar days after 
    the contract receives notice of the contract award, or the protest will not be considered. All 
    bid protests shall be in writing, submitted to the Contracting Officer or designee, who shall 
    issue a written decision on the matter. The Contracting Officer may, at his/her discretion, 
    suspend the procurement pending resolution of the protest if the facts presented so warrant.

B.  Contractor Claims. All claims by a contractor relating to performance of a contract shall be 
    submitted in writing to the Contracting Officer for a written decision. The contractor may 
    request a conference on the claim. The Contracting Officer’s decision shall inform the 
    contractor of its appeal rights to the next higher level of authority in FHA. Contractor claims 
    shall be governed by the Changes clause in the form HUD-5370.



                                                          Handbook No. 7460.8 REV 2  

Required Efforts

Consistent with Presidential Executive Orders 11625, 12138, and 12432, and Section 3 of the 
HUD Act of 1968, all feasible efforts shall be made to ensure that small and minority-owned 
businesses, women’s business enterprises, and other individuals or firms located in or owned in 
substantial part by persons residing in the area of the FHA project are used when possible. Such 
efforts shall include, but shall not be limited to:

A.  Including such firms, when qualified, on solicitation mailing lists;

B.  Encouraging their participation through direct solicitation of bids or proposals whenever they 
    are potential sources;

C.  Dividing total requirements, when economically feasible, into smaller tasks or quantities to 
    permit maximum participation by such firms;

D.  Establishing delivery schedules, where the requirement permits, which encourage 
    participation by such firms;

E.  Using the services and assistance of the Small Business Administration, and the Minority 
    Business Development Agency of the Department of Commerce;

F.  Including in contracts, to the greatest extent feasible, a clause requiring contractors, to 
    provide opportunities for training and employment for lower income residents of the project 
    area and to award subcontracts for work in connection with the project to business concerns 
    which provide opportunities to low-income residents, as described in 24 CFR Part 135 (so-
    called Section 3 businesses); and

G.  Requiring prime contractors, when subcontracting is anticipated, to take the positive steps 
    listed above.  

Goals shall be established periodically for participation by small businesses, minority-owned 
businesses, women-owned business enterprises, labor surplus area businesses, and Section 3 
business concerns in FHA prime contracts and subcontracting opportunities. 


    1.  A small business is defined as a business that is:  independently owned; not dominant in 
        its field of operation; and not an affiliate or subsidiary of a business dominant in its field 
        of operation. The size standards in 13 CFR Part 121 should be used to determine 
        business size.

    2.  A minority-owned business is defined as a business which is at least 51% owned by one or 
        more minority group members; or, in the case of a publicly-owned business, one in 
        which at least 51% of its voting stock is owned by one or more minority group members, 
        and whose management and daily business operations are controlled by one or more such 
        individuals. Minority group members include, but are not limited to Black Americans, 
        Hispanic Americans, Native Americans, Asian Pacific Americans, Asian Indian 
        Americans, and Hasidic Jewish Americans.

    3.  A women’s business enterprise is defined as a business that is at least 51% owned by a 
        woman or women who are U.S. citizens and who control and operate the business.




                                                          Handbook No. 7460.8 REV 2
    4.  A “Section 3 business concern” is as defined under 24 CFR Part 135.

    5.  A labor surplus area business is defined as a business which, together with its 
        immediate subcontractors, will incur more than 50% of the cost of performing the 
        contract in an area of concentrated unemployment or underemployment, as defined by the 
        DOL in 20 CFR Part 654, Subpart A, and in the list of labor surplus areas published by 
        the Employment and Training Administration.


Other than approval of this Procurement Policy, approval by the Board of Commissioners is not 
required for any procurement action, as permitted under State and local law. Rather, it is the 
responsibility of the Executive Director to make sure that all procurement actions are conducted 
in accordance with the policies contained herein. 


While the Executive Director is responsible for ensuring that the FHA’s procurements comply
with this Policy, the Executive Director may delegate all procurement authority as is necessary 
and appropriate to conduct the business of the Agency.

Further, and in accordance with this delegation of authority, the Executive Director shall, where 
necessary, establish operational procedures (such as a procurement manual or standard operating 
procedures) to implement this Policy. The Executive Director shall also establish a system of 
sanctions for violations of the ethical standards described in Section III below, consistent with 
Federal, State, or local law.


The FHA must maintain records sufficient to detail the significant history of each procurement 
action. These records shall include, but shall not necessarily be limited to, the following:

    A.  Rationale for the method of procurement (if not self-evident);

    B.  Rationale of contract pricing arrangement (also if not self-evident);

    C.  Reason for accepting or rejecting the bids or offers;  

    D.  Basis for the contract price (as prescribed in this handbook);

    E.  A copy of the contract documents awarded or issued and signed by the Contracting 

    F.  Basis for contract modifications; and

    G.  Related contract administration actions.

The level of documentation should be commensurate with the value of the procurement. 

Records are to be retained for a period of three years after final payment and all matters 
pertaining to the contact are closed. 



                                                          Handbook No. 7460.8 REV 2

Property no longer necessary for the FHA’s purposes (non-real property) shall be transferred, 
sold, or disposed of in accordance with applicable Federal, state, and local laws and regulations. 


Before initiating any contract, the FHA shall ensure that there are sufficient funds available to 
cover the anticipated cost of the contract or modification. 


The FHA self-certifies that this Procurement Policy, and the FHA’s procurement system, 
complies with all applicable Federal regulations and, as such, the FHA is exempt from prior 
HUD review and approval of individual procurement action.



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                                                          Handbook No. 7460.8 REV 2      
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