Sec.17a-306-28. Procurement practices and contracting

This section spells out the elements of a process for the competitive award of contracts and grants, as well as the essential policies under such a process.

A fundamental tenet of sound procurement practice is the guarantee of open and free competition. In general, all purchases of goods and services shall be based, where possible and practical, on competitive bids. Evidence of competition, or documentation of the reasons for a lack of competition, shall be maintained in the procurement and contracting records of the agency.

(a) Threshold for Competition

(1) As stated in Section 17a-306-28 (c), free and open competition should prevail in all awards—grant or contract—of over $5,000.

(2) Even when a small-purchase arrangement or a purchase order will be employed for purchases of $5,000 or less, competition among potential bidders or proposers should be sought to the maximum extent feasible. This can be achieved by telephone bids/quotes with written confirmation by the lowest, qualified bidder or by obtaining documented bids/quotes from all bidders/proposers.

(3) For minor, recurring purchases of under $100, grantees and subgrantees of the Connecticut Department on Aging should periodically test the comparability of alternative vendors' prices.

(b) Grant Awards to Area Agencies on Aging

The Connecticut Department on Aging is authorized under Section 309 (a) of the Older Americans Act to award grants or contracts, or a combination of both, to a designated area agency on aging to administer programs under an approved area plan. The Connecticut Department on Aging has determined that the contract mechanism is the appropriate vehicle for making awards to area agencies on aging in furtherance of its purpose under its approved area plan.

(c) Use of Contracts and Grants by Area Agencies on Aging

(1) Area agencies on aging are authorized to award grants or contracts, or a combination of both, to further the goals under its approved area plan. As covered by Section 17a-306-28 (a), all grant or contract awards above $5,000 shall be competitively awarded.

(2) The Federal Grant and Cooperative Agreement Act of 1977, as amended, should be consulted for guidance on when to award a grant or financial assistance award versus those instances where a contract or a procurement action would be preferable. In general, under a financial assistance award, its purpose is to advance the capacity or interests of the recipient, not the granting agency; the awarding agency does not direct work or approve deliverables; the granting agency acts as a resource and provides advice and guidance to the recipient. Under grants, cost to the awarding party is not a controlling evaluation factor, provided total cost is within an acceptable range. Procurement actions are always entered into to meet an awarding party's need for a particular product or service and such agreements establish mutual rights and obligations of the awarding party as buyer and the contractor as the seller. Cost under contracts is usually the controlling factor in determining the successful bidder.

(3) To the extent practical, area agencies on aging should preclude mixing cost-reimbursement and fixed-price or fixed rate awards to the same provider for the same or similar service.

(d) Prior Approval of all Noncompetitive Grant or Contract Awards

(1) All subgrant and contract awards exceeding $5,000 must be competitively awarded unless the area agency on aging obtains prior written approval from the Connecticut Department on Aging.

(2) All proposed sole-source contracts or where only one bid or proposal is received in which the aggregate expenditure is expected to exceed $5,000 shall be subject to prior approval of the Connecticut Department on Aging.

(e) Authorized Types of Contracts and Solicitation Methods

(1) Area agencies on aging may award grants and/or contracts for the provision of services under Title III of the Older American Act. Irrespective of the type of contract awarded, area agencies on aging shall provide, to the maximum extent practical, open and free competition. Area agencies on aging may use fixed-price contracts, cost-reimbursement contracts, purchase orders or incentive contracts, or a combination of each, based on a determination by the area agency on aging of the contract type most appropriate for the procurement and for promoting the best interests of the program involved.

(2) In soliciting interest from potential contractors, area agencies on aging may use an invitation for bid (IFB), a request for proposal (RFP), or a request for quotation (RFQ). Under an invitation for bid, it is anticipated that the area agency on aging has a precise specification of the product or service to be rendered, does not intend to engage in discussion with potential bidders before the award, contemplates a fixed price contract and will make the award to the "lowest qualified bidder."

(3) Under an RFP, the area agency on aging may make a fixed price or a cost reimbursement award, intends to engage in negotiations or discussions with potential proposers, has a precise set of criteria of which price is secondary to technical factors and the specifications to which the proposer will be required to adhere are not that precise or specific.

(4) Under certain circumstances, an area agency on aging may request potential contractors to respond to an RFQ. Under an RFQ, the area agency on aging would not only want to know the proposer's price, but how the proposer intends to conduct the project and the staffing the proposer intends using. Unlike an IFB, the award would be based on technical factors, but price would still be uppermost in the award decision. Unlike an RFP, the technical factors for award are not as numerous or important.

(f) Restriction on Purchase or Order-Splitting

In attempting to circumvent the thresholds for required competition and advertising of bids or proposals, area agencies on aging shall not resort to breaking an entire product or service into its component parts and securing each through other-than-competitive means. The product or service should be bought "whole."

(g) Connecticut Department on Aging Approval of Contracts with For-Profit Organizations

Section 212 of the Older Americans Act requires the approval of the Connecticut Department on Aging prior to entering into agreements with for-profit or commercial organizations. This statutory requirement does not apply to contracts with private or public non profit agencies or organizations.

(h) Cost Principles for Commercial Organizations

In the case of all negotiated contracts, awarding organizations are required to perform some form of cost analysis. In order to perform this analysis, as well as provide some guidance to commercial organizations on the appropriate cost principles, area agencies shall incorporate in all solicitations for negotiated contracts with commercial organizations the applicable cost principles: OMB Circular A-122 for nonprofit organizations, OMB Circular A-21 for educational institutions.

(i) Allowability of Profit on Contracts

On contracts, profit as well as loss may be earned in addition to incurring direct and indirect costs. For a cost-reimbursement contract, in order to charge for such a profit, it must have been originally bid. Nothing precludes a nonprofit as well as a for-profit organization from earning a profit on a contract.

(j) Reasonableness of Contractor Profit

The level of profit to be earned by a contractor shall be determined by the area agency on aging and depend on a contract-by-contract negotiation.

(k) Cost or Price Analysis of All Contract Awards

(1) Some form of price or cost analysis should be made in connection with every contract. Price analysis may be accomplished in various ways, including the comparison of price quotations submitted, market prices and similar indices, together with discounts. Cost analysis is the review and evaluation of each element of cost to determine reasonableness, allocability and allowability.

(2) Support for all price or cost analyses conducted for contracts of over $10,000 should be retained in the contract file for a period of three years from final contract payment, or until audited.

(l) Performance Based Contracting by Area Agencies on Aging

Guidance from the Administration on Aging provides that area agencies on aging should model performance-based payment systems for use in managing Title III funds awarded to local service providers.

(m) Use of Contract Reporting Elements Other Than in Statewide Management Information System (MIS)

(1) Area agencies on aging and all grantees and contractors under all Title III programs are required to participate in the Statewide MIS unless a waiver is received from the Connecticut Department on Aging.

(2) When performance-based contracting is used, area agencies on aging shall reimburse contractors based on reconciled MIS statistics.

(3) Area agencies on aging, grantees and contractors may request a waiver from the requirement to conform to the MIS statistics when the service cannot be accurately measured by the MIS or the cost of collecting a statistic would far outweigh the benefit from collecting the data. Prior approval must be obtained from the Connecticut Department on Aging for any exception to Statewide MIS reporting or use of reconciled MIS results to reimburse contractors.

(n) Unauthorized Awards to Debarred, Suspended or High-Risk Grantees or Contractors

(1) Area agencies on aging will make awards only to responsible grantees or contractors possessing the ability to perform successfully under the terms and conditions of the proposed grant or procurement. Consideration will be given to such matters as the integrity of the grantee or contractor, compliance with public policy, record of past performance and financial and technical resources.

(2) Area agencies on aging must not make any award or permit any award (subgrant or contract) at any tier to any party that is debarred or suspended or is otherwise excluded from or ineligible for participation in Federal assistance programs.

(3) Area agencies on aging will require their proposed subrecipients and contractors at any tier to certify whether they have been excluded from participation in Federal assistance programs.

(4) If an area agency on aging believes that there are compelling reasons for making an award to a debarred, suspended or voluntarily excluded person in a particular area, the recipient may apply to the Connecticut Department on Aging for a waiver from this requirement. Such waivers will be granted only in unusual circumstances upon the written determination, by an authorized Connecticut Department on Aging Official, of the compelling reasons justifying the participation.

(o) Area Agency on Aging Contracts for an Administrative Function

Provided the area agency on aging does not transfer substantive responsibility for management of the area plan to a third party, as described in Section 17a-306-23 (b) (2) (D), all contracts, even those for an administrative function, must abide by Section 17a-306-28 (a), (c), (d), and (g). No other prior approvals are required for area agencies on aging contracts for an administrative function.

(p) Authority for Multiyear Awards

(1) Nothing precludes an area agency on aging from making a multiyear award provided it requests subsequent year's prices in the original solicitation, the resulting contract has a satisfactory performance clause and a funds availability clause. An optional-year contract is the contracting mechanism.

(2) The maximum period of time for a multiyear contract from the effective date of the contract to closeout shall be three years. Contracts for periods longer than three years shall be reprocured at the end of the three-year period through normal competitive processes.

(q) Use of Bid, Payment, Performance Bonds or Retainage

(1) Awards should only be made with responsible contractors. In instances where area agencies on aging would be taking undue risk to award a contract without such assurances, provided the imposition of a bonding requirement would not unduly limit the number of small or minority firms bidding, area agencies on aging should consider the requirement for bid, payment or performance bonds.

(2) To ensure the adequacy of performance of a product over an extended period, an area agency on aging should also consider a retainage in circumstances where the cost of a performance bond would be prohibitively expensive.

(r) Preference for Small Business and Minority Firm Awards of Grants and Contracts

It is the Connecticut Department on Aging's policy that a fair share of contracts and grants be awarded to small and minority business firms and nonprofit organizations. 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. Refer to Section 9 (a) (1)-(6), Attachment O of OMB Circular A-102 as guidance on the kind of affirmative steps area agencies on aging should consider in their contracting activities.

(s) Contract and Competitive Grants Appeals Process

Area agencies on aging shall establish an appeals and hearing process to resolve disputes, claims or appeals involving contracts and competitively awarded grants. As a minimum, this process should describe:

(1) Applicable procurement rules to be used in the process.

(2) Designation of an impartial officer to hear and pass on the dispute, claim or appeal.

(3) Form and timing of the claim to be filed.

(4) Right of the claimant to counsel.

(5) Hearing procedures.

(6) Manner and timing of the hearing officer's opinion.

(7) Right to appeal to the Connecticut Department on Aging.

(8) Record retention and disposal of the hearing's record.

(Effective November 8, 1991)