Procurement Process for Nonprofits
1. What will be Purchased
Sealed Bid method must be used for construction-related services.
- Determining factor: Most reasonable, responsible, responsive bid
- Example: Contractor hired to rehabilitate or reconstruct a home; Construction trade services (such as electrical, plumbing, framing, etc.); Demolition and disposal services
2. Procurement Type: Sealed Bid
When using the Sealed Bid procurement method, bids for required services are publicly solicited and a firm fixed-price contract is awarded to the lowest responsible bidder. Sealed Bid procurement is required for construction contracts.
3. Identify Staff Involved in Purchase Process
Individuals involved in the procurement process may include, but are not limited to:
- Program Director or Manager
- Construction inspector or manager
- Quality Control
- Accounting/budget/audit professionals
Avoid Conflict of Interest
Administrator must ensure there is sufficient separation of staff duties among individuals involved in the procurement process in order to avoid conflicts of interest. For example: Someone other than the person(s) conducting the purchasing processes should review and approve payment for the goods/services procured; employees in the purchasing function should not have record-keeping responsibilities in the cash disbursement system; employees involved in the receipt of goods from vendors should not be involved in the purchasing or cash disbursement processes.
Conflict of interest occurs when a "covered person" inappropriately benefits, either directly or indirectly, as a result of:
- Procurement actions taken in the administration of federal funding; or
- Receipt of assistance provided by federal funding
Covered persons include:
- All employees, officers, elected or appointed officials, and agents of the Administrator, and their family members, partners, and associates
Covered persons cannot:
- Participate in procurement of the beneficiary for contractual award or selection of the beneficiary for assistance
- Conduct business with the procured provider or the assisted individual
- Solicit or accept gratuities, favors, or items of monetary value from the procured provider or the assisted individual
One individual may assume several of the duties outlined below as long as the assignment maintains separation of duties and avoids conflict of interest.
Procurement Oversight: The individual responsible for procurement oversight assumes all responsibility for ensuring that the procurement process is compliant and timely.
Compliance with Internal Policy: The individual responsible for ensuring compliance with Administrator's internal written procurement policy and procedures must:
- Ensure free and open competition
- Use appropriate methods for soliciting goods and services in accordance with applicable rules, regulations, and policies
- Determine the best value for goods and services purchased
- Comply with local/state/federal requirements
Contract Management: The individual responsible for overseeing contract management must ensure the following factors are appropriately addressed:
- Compliance with applicable local/state/federal rules, regulations and administrative policies and procedures
- Development of contractual timelines to ensure program benchmarks are met
- Records management and documentation
- Appropriate expenditure of funds
- Quality goods and services obtained at lowest reasonable prices
- Development and negotiation of contracts/agreements awarded
- Post-procurement monitoring of contractor performance
Timeline Tracking: The individual responsible for overseeing procurement timelines must ensure that procedures are undertaken in a timely manner so that goods/services are received in sufficient time to allow compliance with program requirements and contractual benchmarks. Any variations must be acknowledged and the procurement timeline adjusted as necessary. See Step #4 for additional guidance.
Development of Scope of Work: The individual responsible for developing the Scope of Work must be qualified to assess the technical requirements for the goods/services being procured and be able to provide a detailed written description of the materials/products/services needed. See Step #5 for additional guidance.
Evaluation of Bids Received: Administrator must designate a committee or individual responsible for the objective assessment and selection of bids based on established evaluation criteria. See Step #8 for additional guidance.
4. Establish Timeframes
Ensure procurement procedures are undertaken in a timely manner so that goods/services are received in sufficient time to allow compliance with program requirements and contractual benchmarks. Consider the following factors:
- Time required to develop the Scope of Work
- Construction activities – requires physical inspection of property and development of Work Write-up/Cost Estimate by a qualified individual
- Goods/services – requires analysis of product/services required and descriptive write-up for solicitation of bids
- Time required to develop Invitation for Bid (IFB)
- Required publication period for IFB
- Time required for bids by service providers
- Time required to review bids
- Time required for formal approval by board (if applicable)
- Time required to develop an appropriate contract (if applicable) and execute the agreement
- Allowance for unforeseen circumstances or delay
- Allowance for potential bidder protest or appeal
- Be aware of contractual benchmarks or terms
Contract or Agreement Terms: Consider the length of the contract being awarded, and include sufficient time for the vendor/service provider to prepare, implement and finish the entire project.
Threshold or Production Timelines: Consider including performance thresholds with specific benchmark completion dates identified in the contract.
5. Develop Scope of Work
Create a thorough, detailed description of the goods/services to be purchased. Include specifications, standards, and minimum qualifications desired. Factors to be considered in the Scope of Work include, but are not limited to:
- Essential characteristics of the required product/service
- Quality and quantity of materials/products/services
- Minimum required standards for labor or materials, as applicable
- Requirements related to:
- Program rules and regulations including but not limited to:
- Historically Underutilized Businesses (HUBs)
- Section 3 (Economic Opportunities for Low Income People)
- Nondiscrimination and equal employment opportunity
- Bidder protest procedures
- Conflict of interest
- Debarment status (state and federal)
- Applicable codes/standards and plans/specifications (especially as related to construction)
- Methods and materials
- Required date of completion
Guidance and Sample Documents
- Flow Chart Specifications Writing Process (PDF)
- Guidance: Initial Inspection (PDF)
- Guidance: Specifications Phrases (PDF)
- Guidance: Specifications Writer's Checklist (PDF)
- Guidance: Seven C's of Specification Writing (PDF)
- Sample General Specifications (PDF)
- Sample Scope of Work: Accessibility Modifications (PDF)
6. Create Bid Package
An Invitation for Bid (IFB) is created and published when using the Sealed Bid method for procuring a contractor. The IFB should include:
- Clear and concise description of the work required for the rehabilitation or reconstruction of the properties being assisted
- Required timeline for completion of the construction work
- Required qualifications for the bidder:
- Skills, experience, capacity
- Certifications or license
- Financial resources
- Knowledge of codes/standards/specifications applicable to the program
- Knowledge of local/state/federal rules and regulations applicable to the program
- Debarment status
- Instructions for obtaining a bid packet from the Administrator
- Required qualifications for the bidder
- Reference to the applicable funding source or program, including contract or award number
- Information about the location/date/time at which bids must be received, and date on which bids will be publicly opened and awarded.
- Sample Invitation for Bid (PDF)
- Sample General Instructions to Bidders (PDF)
- Sample Building Contractor Application (PDF)
- Sample Construction Bidder Qualifications Form (PDF)
- Sample Bidder Protest Policy and Procedures (PDF)
- Sample Contractor Certification Form (PDF)
7. Begin Bid Period
The bid period begins when the Invitation for Bid (IFB) is published or posted.
- Publically advertise, or
- Notify pre-approved contractor list (ensure proper procurement of pre-approved list of contractors)
For Sealed Bid, as bidders respond during the bid period:
- Provide bid packets to interested bidders. Bid packets should include:
- Addresses and information regarding properties being assisted
- Building plans/specifications
- Applicable construction codes/standards
- Applicable program rules/regulations
- Timelines for completion
- Warranty information
- Method of payment information
- Copies of any required forms
- Copy of sample contract
- Contact information
- Instructions for submitting the bid (location/date/time)
- Evaluation criteria
- Bidder protest procedures
- Schedule a pre-bid conference and/or walkthrough
- Respond to any questions from bidders
- Issue any addenda to the Scope of Work, if required
- Document all activity in this step
8. Accept and Evaluate
- Administrator's designated committee or individual must record the receipt of at least two (2) bids. Bids must be:
- Responsive – fully conforms to specific information requested
- Reasonable – include reasonable costs and materials in line with industry practice and work required
- Responsible – provider possesses suitable skill-set to accomplish the job and evidences ability to perform with integrity and reliability
- Bids for construction services must be opened at the designated time and place in the presence of witnesses. Selection of bids for construction services must be based on lowest, most responsive, reasonable, and responsible offer.
- Confirm and document the absence of conflict of interest for all bids. Confirm and document the bidder has not been state debarred or federally debarred.
- Bids may be rejected if there is a sound documented reason.
- TDHCA pre-approval is recommended if only one bid is received.
- Accept the most responsive, reasonable, and responsible bid and document approval by Board of Directors or approved designee, as applicable.
9. Make Award
- Notify the accepted bidder and the unsuccessful bidders. Allow time for exercise of protest rights by unsuccessful bidders.
- Schedule the pre-construction conference with the accepted bidder and all appropriate parties.
- Execute the firm, fixed-price contract with the accepted bidder.
- Document the steps of this process and ensure copies of all documents are retained in your Procurement file.