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Housing Agency Marketplace - Housing Agency Marketplace
Customer Support: 866-526-9266

Thu. Nov 30, 2023
08:43 PM UTC

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


3.1 Procurement Planning (24 CFR 85.36 (b)(4))
A.	General. Planning is essential to managing the procurement function 
	properly; however, the type and extent of planning will depend on, among 
	other factors, the method and size of the procurement, with larger and 
	more complex procurements requiring more planning.

	1.	Careful advance planning provides the PHA with adequate time to 
		accomplish its procurement actions. Advance planning helps to: 
		maximize competition and competitive pricing among contracts and 
		decrease the PHA’s procurement costs; reduce PHA 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.

	2.	PHAs should periodically review their record of prior purchases, as 
		well as future needs, to find patterns of procurement actions that 
		could be performed more efficiently or economically. Items purchased 
		repetitively might be obtained more economically through various 
		master contracts. However, consideration should be given to storage, 
		security, and handling requirements when planning these types of 
		purchasing actions. For example, it may not be economical or prudent 
		to buy truckloads of salt in summer months for deep discounts if 
		there is no appropriate storage space or if the cost of handling 
		would exceed the savings in price. 

	3.	PHAs may enter into intergovernmental agreements with State or local 
		government agencies (including other PHAs) to obtain needed supplies 
		or services if such agreements will foster economy and efficiency. 
		The use of intergovernmental agreements can significantly reduce the 
		amount of time required to contract for supplies or services, while 
		allowing PHAs to take advantage of prices obtained through volume 
		purchasing by State or local agencies. (See Chapter 14.)

B.	Individual Procurement Plans (IPPs). For larger, more complex procurements,
	such as major computer purchases or construction projects, PHAs should 
	establish IPPs. IPPs establish deadlines or milestones for completion of the 
	steps necessary to assure timely delivery or performance and may also include 
	staffing assignments. The scope of the IPP should be determined by the 
	Contracting Officer. 

C.	Equipment Lease or Purchase. Based on a case-by-case evaluation of costs and 
	other factors, PHAs should consider the leasing of equipment. Those factors 
	would include: length of period the equipment is to be used and the extent 
	of use within that period; financial and operating advantages of alternative 
	types and makes of equipment; cumulative rental payments for the estimated 
	period of use; net purchase price; transportation and installation; 
	maintenance and other service costs; potential obsolescence of the equipment 
	because of imminent technological improvements; availability of the purchase 
	items; trade-in or salvage value; imputed interest; and availability of 
	servicing capability (for example, whether the equipment can be serviced by 
	PHA staff).

3.2 Independent Cost Estimate (ICE) (24 CFR 85.36(f))
A.	The ICE is the PHA’s estimate of the costs of the goods or services to be 
	acquired under a contract or a modification.  It serves as the PHA’s 
	yardstick for evaluating the reasonableness of the contractor’s proposed 
	costs or prices.



                                                          Handbook No. 7460.8 REV 2
B.	The ICE also helps the Contracting Officer determine the contracting method 
	to be used.  For example, if the costs can be estimated with a high degree of 
	confidence in their accuracy, sealed bidding may be possible. 

C.	While the Contracting Officer is responsible for the preparation of the ICE, 
	other personnel (e.g., the end user, or budget and finance) are usually 
	involved and may actually do most of the preparation.  The PHA may develop
	the ICE using its own employees, outside parties (e.g., consultants), or a 
	combination of the two.  If any outside party (whether compensated or not) 
	assists in developing the ICE, the PHA must take appropriate steps to 
	ensure that organizational conflicts of interest are avoided and that 
	the outside party does not obtain any competitive advantage from its 
	advance knowledge of the PHA’s cost estimate (see also Chapter 4, Ethics 
	in Public Contracting).

D.	The Contracting Officer shall prepare, or have prepared, an ICE commensurate 
	with the purchase requirement.  The level of detail will depend upon the 
	dollar value of the proposed contract and the nature of the goods or 
	services to be acquired.  The ICE must be prepared prior to the 
	solicitation of offers.  The requirements for ICEs are:

	1.	For Micro Purchases (below $2,000), the Contracting Officer 
		generally does not need to prepare an ICE.  Price reasonableness 
		normally will be based on a comparison with historical prices paid 
		for the item, commercial catalog prices, or other offers.  

	2.	For purchases above $2,000 but less than the PHA’s small purchase 
		threshold, documentation should be kept to a minimum.  The ICE may 
		be based on prior purchases, commercial catalogs, or detailed 
		analyses (e.g., purchases for services).

	3.	For purchases above the PHA’s small purchase threshold, the level of 
		detail will vary but should be commensurate with the size (i.e., 
		dollar value), complexity, and commercial nature of the requirement.  
		ICEs are normally broken out into major categories of cost (e.g., 
		labor, materials, and other direct costs such as travel, overhead, 
		and profit). Commercially available products and services may 
		require less detail as the marketplace tends to provide current 
		reliable pricing information for commercially available products; a 
		PHA may also not need to break out components.  Non-commercial type 
		requirements, and work designed specifically for the PHA, will 
		require much more extensive estimation and a detailed ICE.  

E.	The ICE serves as the primary in-house gauge of cost and price 
	reasonableness, but it should not be relied upon to the exclusion of 
	other sources of pricing information.  Market conditions may fluctuate 
	between the time the ICE is prepared and the receipt of offers.  For 
	example, materials or labor costs may have increased or decreased.  If 
	a significant period of time has elapsed, or the PHA knows that certain 
	market conditions have changed, the Contracting Officer should request 
	that an updated ICE be prepared to use in evaluating offers.


                                                          Handbook No. 7460.8 REV 2                                                          
3.3 Documentation
A.	General 24 (CFR 85.36(b)(9)). The PHA must maintain records sufficient to 
	detail the significant history of each procurement action. Such documentation 
	is particularly important in the event a protest is lodged against the PHA. 
	It will also facilitate future purchases of similar supplies or services 
	since it will not be necessary to recreate solicitation documents. 
	Supporting documentation shall be in writing and placed in the procurement 
	file. These records shall include, but shall not necessarily be limited to, 
	the following:

	1.	Rationale for the method of procurement selected. For example, the 
		contract file would not need to state why the Contracting Officer 
		chose small purchase procedures to order a desk but would want to 
		note why non competitive proposals was used for a roofing contract.

	2.	The solicitation.

	3.	Selection of contract pricing arrangement, but only if not apparent. 
		For example, the contract file would not need to document why a firm 
		fixed-price was used to obtain building materials.

	4.	Information regarding contractor selection or rejection, including, 
		where applicable, the negotiation memo, the source selection panel, 
		evaluation report, cost and price analysis, email correspondence 
		(including offers, selections, pertinent pre- and post-award 
		discussions and negotiations, etc.)

	5.	Basis for the contract price (as prescribed in this handbook), and

	6.	Contract administration issues/actions.
		The level of documentation should be commensurate with the value of 
		the procurement. A sample contract file checklist is included in 
		Appendix 2. 

B.	Record Retention (24 CFR 85.42(a)&(b). PHAs shall retain all significant 
	and material documentation and records concerning all procurements they 
	conduct. These records must be retained for a period of three years after 
	final payment and all matters pertaining to the contact are closed. If any 
	claims or litigation are involved, the records shall be retained until all 
	issues are satisfactorily resolved.

C.	Audits. HUD and the Comptroller General of the United States have the right 
	to audit all books, documents, papers, and records of the PHA that are 
	pertinent to financial assistance provided by HUD (see section 15 of the 
	Annual Contributions Contract, or ACC). HUD will periodically perform audits 
	and management review of the PHA procurement function to determine whether 
	the PHA’s procurement actions meet the requirements set forth in 24 CFR 
	85.36 and this handbook. Additionally, 24 CFR 85.36(i)(11) requires PHAs to 
	include in their contracts a clause requiring retention by the contractor of 
	all required records pertaining to the contract. (This clause is discussed 
	in more detail, along with other mandatory contract provisions, in 
	Chapter 10.) These records must be retained for a period of three years after 
	final payment and all others matters pertaining to the contract are closed.

3.4 Funding and Payment

Regardless of the system used (centralized or decentralized purchasing), the PHA must 
make sure that funds are available for any purchases made and that there is an orderly 
process to pay contractors promptly. 



                                                          Handbook No. 7460.8 REV 2
•	Under centralized purchasing arrangements, the Contracting Officer (often a 
	“buyer” in the Purchasing Department) typically must receive approval from 
	the Budget or Finance Department that funds are, indeed, available before 
	making the purchase.

•	Under a decentralized system, the Housing Manager is generally the 
	Contracting Officer, who should make sure that funds are available in the 
	property’s approved budget before making a purchase.

To maintain good relations with contractors, a PHA should ensure that work 
performed is inspected in a timely manner and that contractor invoices for work 
accepted by the PHA are paid promptly. Unnecessary delays in either inspection or 
payment can discourage contractors from participating in future PHA procurements 
or cause them to increase their bid price to account for expected delays in 
payment. In addition, some States and local governments have passed “Prompt 
Payment” laws that establish specific time standards for payment of contractor 
invoices, along with interest penalties for unjustified late payments. Further, 
in accordance with Office of Management and Budget (OMB) Circular A-87, Cost 
Principles for State, Local, and Indian Tribal Governments, and cross-referenced in 
24 CFR 85.22, certain penalties and interest cannot be paid with HUD program funds 
without written advance permission of HUD. The PHA should become familiar with any 
applicable State or local laws of this nature and incorporate their substance into 
the PHA’s own operational procurement procedures.
3.5 Internal Controls

PHAs must establish appropriate internal controls to assure the proper expenditure 
of funds. In centralized purchasing arrangements, these controls often result in the 
separation of duties between those ordering, those receiving, and those paying for 
goods and services. In decentralized purchasing arrangements, the Housing Manager is 
often the person both ordering and receiving the goods/supplies as well as the person 
authorizing payment. In these latter arrangements, the PHA must establish other means 
of internal controls, such as site-based budgets and appropriate purchasing 
thresholds. Additional information regarding conflicts of interest and other ethical 
considerations is found in Chapter 4, Ethics in Public Contracting. 




                                                          Handbook No. 7460.8 REV 2

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