Federal Assistance Manual Chapter 1-47

CHAPTER 1-47 PROCUREMENT GUIDELINES

• 1-47-00 Purpose
• 1-47-10 Recipient Responsibilities
• 1-47-20 Affirmative Action Requirements
• 1-47-30 Contract Provisions

1-47-00 PURPOSE

This chapter provides guidelines applicable to procurement of supplies, equipment, and other services under grants supported by OSM funds. This chapter provides information to ensure that such materials and services are obtained efficiently and economically and in compliance with the provisions of applicable Federal laws and the Grants Management Common Rule.

1-47-10 RECIPIENT RESPONSIBILITIES

1. State grant recipients shall use their own procurement procedures which reflect applicable State laws and regulations, provided that procurements under grant programs conform with applicable Federal laws. States will ensure that every purchase order or other contract includes any clauses required by Federal statutes and executive orders (see 1-47-13). All other grantees shall follow the requirements of the Common Rule (43 CFR §12.76).

2. The recipient is responsible, in accordance with good administrative practice and sound business judgment, for the settlement of all contractual and administrative issues arising out of procurements entered into in support of agrant. These include, but are not limited to: source, evaluation, protests, disputes, and claims. OSM shall not substitute its judgment for that of the recipient. Violations of law are to be referred to the local, State, or Federal authority having proper jurisdiction.

3. Recipients shall maintain a written code or standards of conduct which shall govern the performance of their officers, employees or agents engaged in the award and administration of contracts supported by OSM funds. No employee, officer or agent of the recipient shall participate in the selection, or in the award, or administration of a contract supported by OSM funds if a conflict of interest, real or apparent, would be involved.

4. Recipients shall maintain records sufficient to detail the significant history of a procurement. These records shall include, but are not necessarily limited to, information pertinent to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the cost or price.

5. The recipient shall establish procurement procedures which provide that proposed procurement actions shall be reviewed by recipient organization officials to avoid the purchase of unnecessary or duplicative items. Consideration should be given to consolidation or breaking out to obtain a more economical purchase. Where appropriate, an analysis shall be made of lease versus purchase alternatives, and any other appropriate analysis to determine which approach would be the most economical. To foster greater economy and efficiency, recipients (and subrecipients, to the extent feasible) are encouraged to enter into State and local intergovernmental agreements for procurement or use of common goods and services.

1-47-20 AFFIRMATIVE ACTION REQUIREMENTS

1. It is national policy to award a fair share of contracts to small and minority business firms. Accordingly, affirmative steps must be taken to assure that small and minority businesses are utilized when possible as sources of supplies, equipment, construction and services. Affirmative steps shall include the following:
   1. Include qualified small and minority businesses on solicitation lists;

   2. Assure that small and minority businesses are solicited whenever they are potential sources;

   3. When economically feasible, divide total requirements into smaller tasks or quantities so as to permit maximum small and minority business participation;

   4. Where the requirements permit, establish delivery schedules which will encourage participation by small and minority businesses.

   5. Use the services and assistance of the Small Business Administration and the Department of Commerce Minority Business Development Agency Information Clearinghouse.

   6. If any subcontracts are to be let, require the prime contractor to take affirmative steps in 1) through 5) above.

2. Recipients shall take similar appropriate affirmative action in support of women's business enterprises.

3. Recipients are encouraged to procure goods and services from labor surplus areas.

4. OSM may impose additional regulations and requirements in the foregoing areas only to the extent specifically mandated by statute or Presidential direction.

1-47-30 CONTRACT PROVISIONS

1. In addition to provisions defining a sound and complete procurement contract, recipients of Federal grant funds shall include the following contract provisions or conditions in all procurement contracts and subcontracts, as required by Federal statutes and executive orders and their implementing regulations.
   1. Contracts other than small purchases shall contain provisions or conditions which will allow for administrative, contractual, or legal remedies in instances where contractors violate or breach contract terms, and provide for such sanction and penalties as may be appropriate.

   2. All contracts in excess of $10,000 shall contain suitable provisions for termination by the recipient, including the manner by which it will be effected and the basis for settlement. In addition, such contracts shall describe conditions under which the contract may be terminated for default as well as conditions where the contract may be terminated because of circumstances beyond the control of the contractor.

   3. All construction contracts awarded in excess of $10,000 by recipients and their contractors or subrecipients shall contain a provision requiring compliance with Executive Order 11246, entitled "Equal Employment Opportunity", as amended by Executive Order 11375, and as supplemented in Department of Labor regulations (41 CFR Part 60).

   4. All contracts and subgrants for construction or repair shall include a provision requiring compliance with the Copeland "Anti-Kickback" Act (18 USC 874) as supplemented in Department of Labor regulations (29 CFR Part 3). This Act provides that each contractor/subrecipient shall be prohibited from inducing, by any means, any person employed in the construction, completion, or repair of public work,to give up any part of the compensation to which he is otherwise entitled. The recipient shall report all suspected or reported violations to OSM.

   5. The contract shall include notice of OSM requirements and regulations pertaining to reporting and patent rights under any contract involving research, developmental, experimental or demonstration work with respect to any discovery or invention which arises or is developed in the course of or under such contract, and of OSM requirements and regulations pertaining to copyrights and rights in data.

   6. All negotiated contracts (except those awarded by small purchases procedures) awarded by recipients shall include a provision to the effect that the recipient, the Department of the Interior, the Comptroller General of the United States, or any of their duly authorized representative, shall have access to any books, documents, papers, and pertinent records of the contractor which are pertinent to that specific contract, for the purpose of making audit, examination, excerpts, and transcription. Recipients shall require contractors to maintain all required records for three years after recipients make final payments and all other pending matters are closed.

   7. Contracts, subcontracts, and subgrants of amounts in excess of $100,000 shall contain a provision which requires compliance with all applicable standards, order, or requirements issued under Section 306 of the Clean Water Act (33 USC 1368), Executive Order 11738, and Environmental Protection Agency (EPA) regulations(40 CFR Part 15), which prohibit the use under nonexempt Federal contracts, grants or loans of facilities included on the EPA List of Violating Facilities. The provision shall require reporting of violations to OSM and to the EPA Assistant Administrator for Enforcement.

   8. Contracts shall recognize mandatory standards and policies relating to energy efficiency which are contained in the State energy conservation plan issued in compliance with the Energy Policy and Conservation Act (P.L. 94-165). OSM may require changes, remedies, changed conditions, access and record retention and suspension of work clauses approved by the Office of Federal Procurement Policy.

2. OSM grantees are exempt from the following provisions:
   1. The Davis-Bacon Act

      The Surface Mining Control and Reclamation Act (SMCRA) does not require compliance with the Davis-Bacon Act (40 USC 276a). OSM was advised by the Associate Solicitor, Division of Surface Mining, by letter of October 4, 1981, that the provisions of the Davis-Bacon Act will apply to OSM programs only where OSM deals directly with a private contractor.

      The Davis-Bacon Act and its enforcement provisions are applicable to OSM Federal assistance programs when:

      1. OSM expends funds for contracts for emergency restoration, reclamation, abatement or prevention of adverse effects of coal mining. (Section 410 of the Act is applicable only to the extent practical.)

      2. OSM is promulgating a Federal program and letting contracts in a State (Section 504 of the Act); and

      3. There is privity of contract between OSM and a construction contractor. The legal term "privity of contract" refers to the relationship between parties (e.g., OSM and a contractor) participating directly in or having a secondary interest in a legal transaction (a contract.) Without a direct relationship between OSM and a contractor, State law and administrative procedures govern whether all construction contracts in excess of $2,000 awarded by recipients and subrecipients shall include a provision for compliance with the Davis-Bacon Act.

   2. The Contract Work Hours and Safety Standards Act (40 USC 327-330)

      State law and administrative procedures govern whether all contracts awarded by recipients and subrecipients in excess of $2,000 for construction contracts and in excess of $2,500 for other contracts which involve the employment of mechanics or laborers shall include a provision for compliance with Section 103 and 107 of the Contract Work Hours and Safety Standards Act.

FEDERAL ASSISTANCE MANUAL
January 2, 1998