HUD Acquisition Regulation; Field Reorganization, Streamlining, and Simplification

SUMMARY: This interim rule makes changes to the HUD Acquisition

Regulation (HUDAR) required to implement: the Department's Field

reorganization, particularly the establishment of the Administrative

Service Centers; the Federal Acquisition Streamlining Act of 1994

(FASA); and Departmental efforts to streamline and simplify the

procurement process.

DATES: Effective Date: October 5, 1995.

Comment due date: Comments on this interim rule must be submitted

on or before November 6, 1995.

addresses: Send written comments to Rules Docket Clerk, Room 10276,

U.S. Department of Housing and Urban Development, 451 Seventh St., SW,

Washington, DC 20410.

FOR FURTHER INFORMATION CONTACT: Edward L. Girovasi, Jr., Director,

Policy and Evaluation Division, Office of Procurement and Contracts,

Room 5262, 451 Seventh Street, SW., Washington, DC 20410-3000 (voice

(202) 708-0294, TDD (202) 708-1112). (These are not toll-free numbers.)

SUPPLEMENTARY INFORMATION:

Background

The uniform regulation for the procurement of supplies and services

by Federal departments and agencies, the Federal Acquisition Regulation

(FAR), was promulgated on September 19, 1983 (48 FR 42102). The FAR is

codified in title 48, chapter 1, of the Code of Federal Regulations.

HUD promulgated its regulation to implement the FAR on March 1, 1984

(49 FR 7696).

The HUDAR (title 48, chapter 24 of the Code of Federal Regulations)

is prescribed by the Assistant Secretary for Administration under

section 7(d) of the Department of HUD Act (42 U.S.C. 3535(d)); section

205(c) of the Federal Property and Administrative Services Act of 1949

(40 U.S.C. 486(c)); the Secretary's delegation effective October 9,

1985 (50 FR 42097); and the general authorization in FAR 1.301.

The purpose of this interim rule is to amend the HUDAR to update

existing coverage with respect to the Department's structure and

organizational responsibilities; to implement FASA (Pub. L. 103-355,

approved October 13, 1994); and to streamline Departmental procurement

practices.

The heading of HUDAR subpart 2401.6 is revised to read ``Career

Development, Contracting Authority, and Responsibilities''.

HUDAR 2401.601-73 is retitled ``Administrative Service Centers''

and is revised to reflect HUD's current field structure and to

eliminate content which duplicates published delegations of procurement

authority.

HUDAR 2401.602-3 is revised to conform to the structure of FAR

1.602-3 and provide greater discretion to the HCA in handling

ratifications.

HUDAR 2402.101 is revised to add definitions for the ``accounting

office'', and the ``best value'' and ``lowest-priced technically

acceptable proposal'' approaches to source selection; to correct the

HCA designation for field procurements; to provide a more generic

definition for ``Legal Counsel''; to add the ``General Counsel'' to the

list of ``Primary Organization Heads''; and to clarify the definition

of ``Source Selection Official''.

The heading of HUDAR Subpart 2404.8 is revised to read ``Government

Contract Files''.

HUDAR 2404.805-1 is renumbered and retitled to conform to recent

FAR changes, and the content is revised to grant the contracting

officer greater discretion in managing the disposition of unsuccessful

proposals.

HUDAR subpart 2405.3 and section 2405.301 are removed in their

entirety. HUD's practices in synopsizing contract awards will conform

to the FAR.

HUDAR 2406.304-70 is revised to establish an approval official

(Director, Office of Procurement and Contracts) for field contracts at

a level consistent with that required by FAR 6.304.

HUDAR 2406.304-71 is removed in its entirety. HUD's practices in

reviewing and approving justifications for other than full and open

competition will conform to the FAR.

HUDAR 2406.501 is revised to state that the Senior Procurement

Executive will designate the Department's Competition Advocate by

Federal Register notice and to authorize each HCA to appoint

contracting activity-level competition advocates.

HUDAR Part 2413 is retitled to conform to the FAR.

HUDAR 2413.107 is redesignated as 2413.106-2 and retitled to

conform to the FAR. The regulation text is unchanged.

HUDAR 2413.403 is redesignated as 2413.402 to conform to the FAR,

and revised to remove an obsolete directive and add correct information

regarding the operation of imprest funds.

HUDAR 2413.404 is redesignated as 2413.403 to conform to the FAR

and the text is revised to avoid duplication of imprest fund

transaction limits stated in the FAR.

HUDAR 2413.505-2 is redesignated as 2413.505-1(b) and retitled to

conform to the FAR. Its text is revised to authorize the use of Form

HUD-2542, Purchase Order and Payment Authorization, for any small

purchase charged to the FHA Fund, and to remove information that is

internal in nature.

HUDAR subpart 2413.6 and section 2413.601 are added to reference

HUD's internal directive governing use of the Government-wide

commercial credit card to make micro-purchases.

HUDAR 2414.406-4 is revised to clarify that the concurrence of

counsel should be obtained at headquarters or the field, depending on

the location of the contracting activity.

HUDAR 2415.407 is revised to separate the basic provision dealing

with proposal content from those cases requiring cost and pricing data.

When the latter are required, new Alternate I is prescribed for use. In

addition, contracting officers are granted the latitude to adapt

Alternate I or develop additional text to deal with situations when

partial cost and pricing data may be needed as provided in FAR 15.804-

6(a)(2).

HUDAR 2415.408 is removed because adequate coverage on issuing

solicitations is contained in the FAR.

HUDAR 2415.411 and 2415.411-70 are removed in their entirety. The

prescribed use of the Form HUD-4056, Abstract of Proposals, is an

internal agency matter.

HUDAR subpart 2415.6 contains numerous revisions to simplify HUD's

source selection practices. While each section change is explained in

turn below, the general thrust of these revisions is to move to one

procedure for the evaluation of proposals, and to clarify distinctions

in procedures when using the ``lowest-priced technically acceptable

proposal'' or ``best value'' approach to source selection.

HUDAR 2415.604 is revised to establish a single procedure for the

[[Page 46153]]

evaluation of proposals and to distinguish responsibility for the

source selection decision under the two possible source selection

approaches-- ``best value'' or ``lowest-priced technically acceptable

proposal''.

HUDAR 2415.605 is revised to require that each solicitation

identify the source selection approach to be used in evaluating

proposals, and to provide a distinction between the types of evaluation

factors available for use.

HUDAR 2415.608 is revised to clarify procedural differences in the

evaluation of proposals under the two possible source selection

approaches, and to eliminate information adequately covered in the FAR.

HUDAR 2415.609 is removed. The content of this section was removed

in an earlier HUDAR amendment; the section title was overlooked.

HUDAR 2415.611 is added to clarify requirements for documentation

of the source selection decision.

HUDAR 2415.612 and 2415.612-70 are removed in their entirety. In

order to streamline and expedite the procurement process, HUD will not

use formal source selection procedures.

HUDAR 2415.613-70 is revised to clarify that the alternative

procedures authorized by this section use the best value approach to

source selection. That same section and 2415.613-72 are both revised to

eliminate references to Source Evaluation Boards, a formal procedure

that will no longer be used.

HUDAR Subpart 2416.3, Cost-Reimbursement Contracts, and sections

2416.301 and 2416.301-3 are removed in their entirety. Recent changes

to the FAR to implement FASA eliminated the requirement for

determinations and findings to support the selection of contract type.

HUDAR subpart 2426.1 is redesignated as subpart 2426.70 to conform

to the FAR. Accordingly, HUDAR 2426.101, 2426.102, and 2426.103 are

redesignated as 2426.701, 2426.702, and 2426.703 (the regulation text

of the latter two sections is unchanged). HUDAR 2426.701 is revised to

delete the list of ethnic groups designated as ``Minority Business

Enterprises'', and instead rely on definitions established by the Small

Business Administration pursuant to Section 8(d) of the Small Business

Act.

HUDAR subpart 2426.2 and section 2426.201 are removed.

HUDAR Subpart 2428.2, Sureties, the heading of section 2428.204,

and section 2428.204-70 are removed in their entirety. FAR 28.203-2

contains adequate information regarding the use of irrevocable letters

of credit.

HUDAR 2429.101 is revised to conform the section title to the FAR

and clarify that coordination with legal counsel may be at headquarters

or in the field, depending on the location of the contracting activity.

HUDAR 2432.402, 2432.906 and 2432.908 are revised to correct

references to HUD field components consistent with the Department's

reorganization.

HUDAR 2436.602-2 and 2436.602-4 are revised to: authorize the

appointment of non-voting advisors to architect-engineer evaluation

boards; change appointment and selection authorities consistent with

the Department's field reorganization; correct references to HUD's

Standards of Conduct; and, clarify that referral of matters to legal

counsel may occur at headquarters or in the field, as appropriate.

HUDAR 2437.205 is revised to remove the requirement for higher-

level review of contracts for advisory and assistance services

contracts consistent with recent changes to the FAR. In addition, the

use of Form HUD-24003, GTR Performance Assessment (Final) is prescribed

to document the utility of products or services delivered by the

contractor, as required by FAR 37.205.

HUDAR 2452.215-70 is revised to separate the requirement for cost

and pricing data from the basic provision concerning proposal content.

A new Alternate I has been added to deal with situations when cost and

pricing data are required, in conformance with recent FAR changes

increasing the threshold for submission of cost and pricing data to

$500,000.

HUDAR 2452.219-70 is revised to eliminate repetition and clarify

the content of Alternate I.

HUDAR 2452.226-70 is revised to make a conforming change in a

reference from 2426.103 to 2426.703, and to delete ``Hasidic Jewish

Americans'' from the ethnic groups listed as ``Minority Business

Enterprises''. Their inclusion was based on an improper application of

the Minority Business Development Agency's regulations at 15 CFR 1400.1

which defines groups eligible for MBDA assistance. Those regulations do

not establish eligibility for other Federal or Federally-funded

programs.

HUDAR 2452.232-70 and 2452.232-71 are revised to allow discretion

in their application and to correct the reference to field components

in Alternate I to both clauses.

HUDAR 2453.213-71 is removed because Form HUD-24001, Order for

Supplies or Services, is no longer in use.

HUDAR 2453.213-72 is renumbered as 2453.213-71 and is revised to

authorize the use of Form HUD-2542, Purchase Order and Payment

Authorization, for any small purchase charged to the FHA Fund.

HUDAR 2453.237-70 is added to define the use of Form HUD-24002, GTR

Performance Assessment (Final), to document contractor performance and

the utility of products or services delivered.

Other Matters

Paperwork Reduction Act

The Paperwork Reduction Act of 1980 (44 U.S.C. 3501-3520) requires

that Federal agencies obtain approval from the Office of Management and

Budget (OMB) before collecting information from 10 or more persons.

There are no new information collection requirements contained in these

amendments to the HUDAR. The OMB Approval Number is 2535-0091.

Justification for Interim Rulemaking

The Department has determined that this rule should be adopted

without the delay occasioned by requiring prior notice and comment

because the majority of the changes either: implement FAR revisions

already in effect that must be followed by HUD contracting personnel

immediately; or, simply correct references to HUD organizational

components consistent with the Department's field reorganization. Since

this interim rule only makes conforming and clarifying changes to

existing provisions, prior notice and comment are unnecessary under 24

CFR Part 10.

Environmental Impact

In accordance with 40 CFR 1508.4 of the regulations of the Council

on Environmental Quality and 24 CFR 50.20(k) of the HUD regulations,

the policies and procedures contained in this rule relate only to the

performance of accounting, auditing and fiscal functions and,

therefore, are categorically excluded from the requirements of the

National Environmental Policy Act.

Regulatory Flexibility Act

As required by section 605(b) of the Regulatory Flexibility Act (5

U.S.C. 601), the undersigned hereby certifies that this rule does not

have a significant economic impact on a substantial number of small

entities because it merely makes amendments to the Department's

acquisition regulations that: simplify HUD's procurement process,

revise internal HUD component references, and implement FAR

[[Page 46154]]

revisions without adding additional requirements.

Executive Order 12612, Federalism

The General Counsel, as the Designated Official under Section 6(a)

of Executive Order 12612, Federalism, has determined that the policies

contained in this rule will not have substantial direct effects on

States or their political subdivisions, or the relationship between the

Federal government and the States, or on the distribution of power and

responsibilities among the various levels of government. The rule makes

technical revisions and corrections to the agency's regulations. As a

result, the rule is not subject to review under the Order.

Executive Order 12606, The Family

The General Counsel, as the Designated Official under Executive

Order 12606, The Family, has determined that this rule will not have

potential for significant impact on family formation, maintenance, and

general well-being, and, thus, is not subject to review under the

Order. The rule involves Departmental procurement procedures only.

Semiannual Agenda of Regulations

This rule was not listed in the Department's Semiannual Agenda of

Regulations published on May 8, 1995 (60 FR 23368,) under Executive

Order 12866 and the Regulatory Flexibility Act.

List of Subjects in 48 CFR Parts 2401, 2402, 2404, 2405, 2406,

2413, 2415, 2416, 2419, 2426, 2428, 2429, 2432, 2436, 2437, 2452

and 2453

Government procurement, HUD acquisition regulations.

Accordingly, title 48, Chapter 24 of the Code of Federal

Regulations, is amended as follows:

PART 2401--FEDERAL ACQUISITION REGULATIONS SYSTEM

1. The authority citation for part 2401 continues to read as

follows:

Authority: 40 U.S.C. 486(c); 42 U.S.C. 3535(d).

2. The heading of subpart 2401.6 is revised to read as follows:

Subpart 2401.6--Career Development, Contracting Authority, and

Responsibilities

3. Section 2401.601-73 is revised to read as follows:

2401.601-73 Administrative Service Centers.

Procurement of supplies and services for HUD field components is

accomplished at the three Administrative Service Centers, each of which

has a Contracting Division. The ASC Contracting Division Director may

redelegate contracting authority to qualified personnel within their

service area jurisdiction, consistent with the Department's published

delegations of procurement authority and 2401.603.

4. Section 2401.602-3 is revised to read as follows:

2401.602-3 Ratification of unauthorized commitments.

(b)(1) Policy. A request for ratification shall be sent to the

Contracting Officer through the Head of the Contracting Activity (HCA).

The request will include an explanation as to the need for the service,

the reason why normal procurement procedures were not followed, to what

extent price competition was received or the price otherwise justified,

and, corrective management actions to avoid ratifications in the

future. If the justification is adequate, the ratification will be

signed by the Contracting Officer and forwarded to the HCA or designee

for approval.

(b)(3) The HCA may delegate authority to approve ratifications

below the simplified acquisition threshold to:

(i) Contracting division directors (Headquarters); or,

(ii) Contracting branch chiefs (Field).

(c)(5) Legal concurrence may be requested if there is a legal issue

involved, e.g. the propriety of the funding source, appropriateness of

the expense, etc.

PART 2402--DEFINITIONS OF WORDS AND TERMS

5. The authority citation for part 2402 continues to read as

follows:

Authority: 40 U.S.C. 486(c); 42 U.S.C. 3535(d).

6. In Sec. 2402.101, the definitions of Head of Contracting

Activity, Primary Organization Heads, and Source Selection Official are

revised, and the definitions of Accounting Office, Best Value, Legal

Counsel, and Lowest-Priced Technically Acceptable Proposal are added in

alphabetical order, to read as follows:

2402.101 Definitions.

Accounting Office means the Office of Finance and Accounting in

headquarters or the Field Accounting Divisions in the field.

Best Value is an approach to source selection that considers the

appropriate balance of technical merit, management capability, and

cost/price factors in deciding which proposal offers the overall ``best

value'' to the Government. A best value procurement permits the

government to award a contract to an offeror with a higher price in

order to obtain a better technical product or service with a lower risk

that performance will be unsuccessful. The selection decision may be

based on a determination of whether to tradeoff paying a higher price

to obtain the added value of a particular proposal.

* * * * *

Head of Contracting Activity (HCA) is defined in accordance with

the FAR. The following HUD officials are designated HCAs:

(1) Director, Office of Procurement and Contracts, for HUD

Headquarters procurement;

(2) The Directors, Administrative Service Center Contracting

Divisions for field procurement;

(3) The President, Government National Mortgage Association (GNMA),

for procurement transactions that are conducted by GNMA in accordance

with 2401.601-72(c).

Legal Counsel means the Office of General Counsel in Headquarters,

or the cognizant Assistant General Counsel in the field.

Lowest-Priced Technically Acceptable Proposal is an approach to

source selection under which all evaluation factors, except price, are

evaluated on a ``Pass-Fail'' basis. It is used when price will be the

deciding factor once the technical acceptability of proposals has been

determined.

Primary Organization Heads are those officials of the Department

who are responsible for the major organizational components of HUD and

who report directly to the Secretary or Deputy Secretary. The Primary

Organization Heads of HUD include: the Assistant Secretaries, the

Inspector General, and the General Counsel.

* * * * *

Source Selection Official means the head of the office initiating

and providing funding for the procurement, or his/her designee. This

role may also be delegated to the contracting officer.

PART 2404--ADMINISTRATIVE MATTERS

7. The authority citation for part 2404 is revised to read as

follows:

Authority: 42 U.S.C. 3535(d).

8. The heading of subpart 2404.8 is revised to read as follows:

[[Page 46155]]

Subpart 2404.8--Government Contract Files

9. Section 2404.805-1 is redesignated as 2404.805 and amended by

revising the section heading and paragraph (a), to read as follows:

2404.805 Storage, handling and disposal of contract files.

(a) Unsuccessful cost and technical proposals shall be retained in

the contracting activity for a period of two months following the

contract award as reference material for debriefings. Upon expiration

of the two month period, the contracting office shall either:

(1) Retain one copy of each such proposal with the official

contract file; or,

(2) Ship one copy of each unsuccessful bid or proposal to the

Federal Records Center unless a debriefing has been requested but not

held, or a protest is pending concerning the procurement. In no event

shall these documents be destroyed before expiration of the retention

periods in FAR 4.805.

* * * * *

PART 2405--PUBLICIZING CONTRACT ACTIONS

10. The authority citation for part 2405 is revised to read as

follows:

Authority: 40 U.S.C. 486(c); 41 U.S.C. 253; 42 U.S.C. 3535(d);

and FAR class deviation approved November 15, 1990.

Subpart 2405.3--[Removed]

11. and 12. Subpart 2405.3 Synopses of Contract Awards is removed.

PART 2406--COMPETITION REQUIREMENTS

13. The authority citation for part 2406 is revised to read as

follows:

Authority: 40 U.S.C. 486(c); 41 U.S.C. 253; 42 U.S.C. 3535(d).

14. Section 2406.304-70 is revised to read as follows:

2406.304-70 Approval of the justification--field procurements.

(a) The justification for other than full and open competition for

field procurements shall be approved in writing--

(3) For a proposed contract more than $1 million but not exceeding

$10 million, by the Director, Office of Procurement and Contracts.

2406.304-71 [Removed]

15. Section 2406.304-71 is removed.

16. Section 2406.501 is revised to read as follows:

2406.501 Requirement.

The Senior Procurement Executive shall designate the Department's

competition advocate by Federal Register notice. Contracting activity-

level competition advocates shall be appointed by each HCA.

PART 2413--SMALL PURCHASES AND OTHER SIMPLIFIED PURCHASING

PROCEDURES

17. The authority citation for part 2413 continues to read as

follows:

Authority: 40 U.S.C. 486(c); 42 U.S.C. 3535(d).

18. The heading of part 2413 is revised to read as follows:

PART 2413--SIMPLIFIED ACQUISITION PROCEDURES

2413.107 [Redesignated as 2413.106-2]

19. Section 2413.107 is redesignated as 2413.106-2 and revised to

read as follows:

2413.106-2 Data to support purchases.

(d) Contracting officers may use Form HUD-24007, Purchase/Delivery

Order Data File, to record all relevant data pertaining to a small

purchase, including recording written and oral quotations received and

documenting orders against GSA contracts.

2413.403 [Redesignated as 2413.402]

20. Section 2413.403 is redesignated as 2413.402 and revised to

read as follows:

2413.402 Agency responsibilities.

(c) Policies and procedures governing the operation of imprest

funds are established in internal directives issued by HUD's Office of

the Chief Financial Officer.

2413.404 [Redesignated as 2413.403]

21. Section 2413.404 is redesignated as 2413.403 and revised to

read as follows:

2413.403 Conditions for use.

(a) Transaction limits above that established in FAR 13.403(a) may

be approved by the Senior Procurement Executive.

2413.505-2 [Redesignated as 2413.505-1]

22. Section 2413.505-2 is redesignated as 2413.505-1 and revised to

read as follows:

2413.505-1 Optional Form (OF) 347, order for supplies and services,

and Optional Form 348, order for supplies and services schedule-

continuation.

(b) For small purchases charged to the FHA Fund, contracting

officers may use Form HUD-2542, Purchase Order and Payment

Authorization.

23. A new subpart 2413.6 and a new section 2413.601 are added to

read as follows:

Subpart 2413.6--Micro-Purchase

2413.601 General.

(c) HUD's procedures concerning the use of the government-wide

commercial purchase card are contained in its Handbook on the

Government-wide Commercial Credit Card Program.

PART 2414--SEALED BIDDING

24. The authority citation for part 2414 is revised to read as

follows:

Authority: 40 U.S.C. 486(c); 41 U.S.C. 253; 42 U.S.C. 3535(d).

25. Section 2414.406-4 is revised to read as follows:

2414.406-4 Mistakes after award.

(d) For determinations under FAR 14.406-4(b)(1) and (2), the Head

of the Contracting Activity will obtain the concurrence of legal

counsel before notification to the Contractor. The Contracting Officer

shall be notified promptly of action to be taken.

PART 2415--CONTRACTING BY NEGOTIATION

26. The authority citation for part 2415 is revised to read as

follows:

Authority: 40 U.S.C. 486(c); 41 U.S.C. 253; 42 U.S.C. 3535(d).

27. In section 2415.407, new paragraphs (b) and (c) are added, to

read as follows:

2415.407 Solicitation provisions.

* * * * *

(b) The contracting officer shall use the language at Alternate I

to request cost and pricing data when it is anticipated that a contract

or subcontract resulting from this solicitation will exceed $500,000 in

value. This language shall also be used for those instances when the

contracting officer determines that full cost and pricing data are

required pursuant to FAR 15.804-2(a)(3).

(c) In those instances when certified cost and pricing data are not

required because an action is $500,000 or less, the contracting officer

may request partial or limited data in order to determine a reasonable

price (see FAR 15.804-6(a)(2)). The contracting officer shall request

only that data which is considered necessary to determine a reasonable

price. If partial or limited data is required, the contracting officer

may adapt the content of Alternate I to

[[Page 46156]]

suit the circumstances of the procurement, or develop additional text

as required.

2415.408 [Removed]

28. Section 2415.408 is removed.

2415.411 [Removed]

29. Section 2415.411 is removed.

2415.411-70 [Removed]

30. Section 2415.411-70 is removed.

31. Section 2415.604 is revised to read as follows:

2415.604 Responsibilities.

(b) The technical requirements related to source selection shall be

performed by a Technical Evaluation Panel (TEP). Generally, a TEP will

consist of three to five voting members, with one member serving as the

chairperson. For more complex procurements, the TEP may add advisors

and/or a committee structure to focus on specific technical issues or

concerns. For inexpensive or routine acquisitions of equipment,

supplies or services, the TEP may consist of one technical

representative. The TEP is responsible for documenting the evaluation

of all proposals as appropriate to the source selection approach in

use, and for making the source selection recommendation(s).

(c)(4) The selection of the source(s) for contract award shall be

made by:

(i) The contracting officer for awards using the ``lowest-priced

technically-acceptable proposal'' approach; or,

(ii) The Source Selection Official (SSO) for awards based on the

``best value'' approach.

32. Section 2415.605 is revised to read as follows:

2415.605 Evaluation factors.

(c) The solicitation shall state the basis for the source selection

decision as either ``lowest-priced technically-acceptable proposal''

(LPTAP) or ``best value'' (see 2402.1, Definitions).

(e) When using the best value approach, each technical evaluation

factor and subfactor shall be assigned a numerical weight (except for

pass-fail factors) which shall appear in the RFP. When using LPTAP,

each evaluation factor is applied on a ``pass-fail'' basis; numerical

scores are not assigned. ``Pass-Fail'' evaluation factors define a

standard of comparison for solicitation/contract requirements which

proposals either completely satisfy or fail to meet.

33. In section 2415.608, paragraph (a) is revised to read as

follows:

2415.608 Proposal evaluation.

(a) After receipt of proposals, the Contracting Officer will

forward copies of the technical portion of each proposal to the TEP

Chairperson or his or her designee. The cost/price portion of each

proposal shall be retained by the Contracting Officer pending initial

technical evaluation by the TEP.

(2) Technical evaluation. The TEP shall rate each proposal based on

the evaluation factors specified in the solicitation. The TEP shall

identify each proposal as being either acceptable, unacceptable but

capable of being made acceptable, or unacceptable. A proposal shall be

considered unacceptable if it is so clearly deficient that it cannot be

corrected through written or oral discussions. Under the best value

approach, predetermined cut-off scores designed to determine a

threshold level of acceptability of proposals shall not be employed.

However, under solicitations where mandatory requirements are

established, those proposals that do not meet the mandatory

requirements may be found unacceptable without further review.

(3) A technical evaluation report, which complies with FAR

15.608(a)(2), shall be prepared and signed by the technical

evaluator(s), furnished to the contracting officer, and maintained as a

permanent record in the official procurement file.

* * * * *

2415.609 [Removed]

34. Section 2415.609 is removed.

35. A new section 2415.611 is added to read as follows:

2415.611 Best and final offers.

(d) After receipt and evaluation of best and final offers, the TEP

shall document its selection recommendation(s) in a final written

report. The final report shall include sufficient information to

support the recommendation(s) made, appropriate to the source selection

approach and type and complexity of the acquisition.

2415.612 [Removed]

36. Section 2415.612 is removed.

2415.612-70 [Removed]

37. Section 2415.612-70 is removed.

38. In section 2415.613, paragraph (a) is revised to read as

follows:

2415.613 Alternative source selection procedures.

(a) The Department of Housing and Urban Development uses procedures

authorized by FAR 15.613 for all research and development contracts and

other contracts where the contractor's proposed methodology of carrying

out the work is a significant selection factor and the award decision

will follow the best value approach.

* * * * *

39. Section 2415.613-70 is revised to read as follows:

2415.613-70 Technical evaluation.

The TEP shall perform the required technical evaluation of

proposals received in accordance with 2415.608.

40. In section 2415.613-72, paragraph (a) is revised to read as

follows:

2415.613-72 Selection and final negotiation.

(a) Selection. After the close of discussions and receipt of best

and final offers, the TEP shall perform a final evaluation and prepare

its selection recommendation for the SSO. Based on this evaluation, the

SSO shall select for final contract negotiation the offeror(s) whose

proposal is most advantageous to the Government in terms of price/cost,

technical and other relevant factors included in the solicitation.

* * * * *

PART 2416--TYPES OF CONTRACTS

41. The authority citation for part 2416 is revised to read as

follows:

Authority: 40 U.S.C. 486(c); 41 U.S.C. 253; 42 U.S.C. 3535(d).

Subpart 2416.3--[Removed]

42-44. Subpart 2416.3--Cost-Reimbursement Contracts is removed.

PART 2426--OTHER SOCIOECONOMIC PROGRAMS

45. The authority citation for part 2426 continues to read as

follows:

Authority: 40 U.S.C. 486(c); 42 U.S.C. 3535(d).

Subpart 2426.1--[Redesignated as Subpart 2426.70]

46. The heading, subpart 2426.1--Minority Business Enterprises, is

redesignated as subpart 2426.70.

2426.101 [Removed]

47. Section 2426.101 is removed.

2426.102 [Removed]

48. Section 2426.102 is removed.

2426.103 [Removed]

49. Section 2426.103 is removed.

Subpart 2426.2--[Removed]

50-51. Subpart 2426.2--Historically Black Colleges and Universities

is removed.

52. A new section 2426.701 is added, to read as follows:

2426.701 Policy.

It is the policy of the Department to foster and promote Minority

Business

[[Page 46157]]

Enterprise (MBE) participation in its procurement program, to the

extent permitted by law and consistent with its primary mission. A

``minority business enterprise'' is a business which is at least 51

percent owned by one or more minority group members; or, in the case of

a publicly-owned business, one in which at least 51 percent 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. For this purpose, minority group members are those

groups of U.S. citizens found to be disadvantaged by the Small Business

Administration pursuant to Section 8(d) of the Small Business Act.

53. A new section 2426.702 is added, to read as follows:

2426.702 Responsibility.

The Director of the Office of Small and Disadvantaged Business

Utilization (OSDBU) develops Departmental MBE plans and policies in

accordance with Executive Orders 11625 and 12432 and by directive from

the Secretary. He or she provides advice and guidance to the Secretary

and Primary Organization Heads on MBE functions, reviews and makes

recommendations to the Secretary on MBE annual plans and goals,

monitors and evaluates the Department's MBE program, and reports on MBE

program performance to the Department of Commerce.

54. A new section 2426.703 is added, to read as follows:

2426.703 Solicitation provision.

Contracting officers shall request all interested contractors,

bidders, or offerors (including those responding to requests for

quotations) to complete the certification at 2452.226-70, Certification

of Status as a Minority Business Enterprise. Completion of this

certification is voluntary and is not a condition of eligibility for

contract award.

PART 2428--BONDS AND INSURANCE

55. The authority citation for part 2428 continues to read as

follows:

Authority: 40 U.S.C. 486(c); 42 U.S.C. 3535(d).

Subpart 2428.2--[Removed]

56.-58. Subpart 2428.2--Sureties is removed.

PART 2429--TAXES

59. The authority citation for part 2429 is revised to read as

follows:

Authority: 42 U.S.C. 3535(d).

60. Section 2429.101 is revised to read as follows:

2429.101 Resolving tax problems.

In order to have uniformity in HUD's treatment of the tax aspects

of contracting and ensure effective cooperation with other Government

agencies on tax matters of mutual interest, the Office of General

Counsel has the responsibility within HUD for handling all those tax

problems. Therefore, the contracting activity will not engage in

negotiation with any taxing authority for the purpose of determining

the validity or applicability of, or obtaining exemptions from or

refund of, any tax. When a problem exists, the Contracting Officer

shall request, in writing, the assistance of legal counsel. The request

shall detail the problem and be accompanied by appropriate backup data.

Counsel shall report to the Contracting Officer as to the necessary

disposition of the tax problem. The Contracting Officer will notify the

contractor of the outcome of the tax problem. Counsel is responsible

for communications with the Department of Justice for representation or

intervention in proceedings concerning taxes.

PART 2432--CONTRACT FINANCING

61. The authority citation for part 2432 continues to read as

follows:

Authority: 31 U.S.C. 3901-3906; 40 U.S.C. 486(c); 42 U.S.C.

3535(d).

62. Section 2432.402 is revised to read as follows:

2432.402 General.

(e)(1) The Determination and Findings required by FAR

32.402(c)(1)(iii) shall be made by the Director, Office of Procurement

and Contracts for Headquarters contracts, or the cognizant Director,

Administrative Services Center Contracting Division for field

contracts.

(2) Each advance payment situation shall be coordinated with the

head of the cognizant accounting office, before authorization may be

given, to ensure that there are controls in place to assure proper

administration of advance payments.

63. Section 2432.906 is revised to read as follows:

2432.906 Contract financing payments.

Except for construction contracts (see FAR 52.232-27), periods for

payment shorter than 30 days shall not be specified in contracts

without the prior approval of the cognizant accounting office to ensure

that procedures are in place to allow timely payment.

64. Section 2432.908 is revised to read as follows:

2432.908 Contract clauses.

(a) The Contracting Officer shall insert a clause substantially the

same as provided at 2452.232-70, Payment Schedule and Invoice

Submission (Fixed-Price), in all fixed-price solicitations and

contracts. The clause with its Alternate I may be used for

solicitations and contracts issued by the Administrative Service

Centers.

(b) The Contracting Officer shall insert a clause substantially the

same as provided at 2452.232-71, Voucher Submission (Cost-

Reimbursement), in all cost-reimbursement solicitations and contracts

when vouchers are to be sent directly to the paying office. The clause

with its Alternate I may be used for solicitations and contracts issued

by the Administrative Service Centers.

PART 2436--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

65. The authority citation for part 2436 is revised to read as

follows:

Authority: 40 U.S.C. 486(c); 42 U.S.C. 3535(d).

66. In section 2436.602-2, paragraphs (a) introductory text,

(a)(2), and (c) are revised, and paragraph (a)(3) is removed, to read

as follows:

2436.602-2 Evaluation boards.

(a) Each architect-engineer evaluation board, whether permanent or

ad hoc (which may include preselection boards), shall consist of at

least three voting members who are Federal employees from the

appropriate program area or from Federal offices outside the program

area as appropriate. One member of each board shall be appointed

chairperson. Non-voting advisors may also be appointed, including

private practitioners in architecture, engineering and related

professions. The members of a permanent board shall be appointed for a

period of two years. Appointment shall be made by the following

authorities with copies of appointment memoranda furnished to the

appropriate contracting activity:

(1) * * *

(2) The cognizant program office head within the State or Area

Office for boards appointed at the field level.

(c) Conflict of interest. Each board member, whether voting or

nonvoting, shall be advised of, and presumed to be familiar with the

regulations at 24 CFR Part 0, Standards of Conduct, regarding conflicts

of interest. If at any time during the selection process a board member

encounters a situation with one or more of the firms being considered

that might be or might appear to be a conflict of interest, he or she

will

[[Page 46158]]

disqualify him or herself and call it to the attention of the

chairperson for resolution and proper action. The chairperson will

refer the matter to legal counsel.

* * * * *

67. Section 2436.602-4 is revised to read as follows:

2436.602-4 Selection authority.

(a) The final selection decision shall be made by the appropriate

Primary Organization Head (Headquarters) or the appropriate program

office head at the cognizant State or Area Office (Field).

PART 2437--SERVICE CONTRACTING

68. The authority citation for part 2437 continues to read as

follows:

Authority: 40 U.S.C. 486(c); 42 U.S.C. 3535(d).

69. Section 2437.205 is revised to read as follows:

2437.205 Management controls.

Documentation of the contractor's performance and the utility of

products or services delivered shall be recorded on Form HUD-24002, GTR

Performance Assessment (Final) by the responsible Government Technical

Representative. This form may also be used to document contractor

performance on other contracts.

PART 2452--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

70. The authority citation for part 2452 continues to read as

follows:

Authority: 40 U.S.C. 486(c); 42 U.S.C. 3535(d).

71. Section 2452.215-70 is revised to read as follows:

2452.215-70 Proposal content and outline.

As prescribed in 2415.407(a), insert the following solicitation

provision in all negotiated solicitations over the small purchase

limitation:

PROPOSAL CONTENT AND OUTLINE (Insert Month, Year)

(a) Proposals shall be submitted in two separate parts as

further described below and shall be enclosed in a sealed envelope

and addressed to the office specified in the solicitation. The

envelope must show the hour and date specified in the solicitation

for receipt, the solicitation number, and the name and address of

the offeror. Part I shall consist of the technical and management

submittal of the proposed work. Part II shall consist of a business

proposal comprised of, cost and pricing data, (if required), and the

offeror's representations and certifications. Each part of the

proposal shall be complete in itself so that the evaluation of both

parts can be accomplished concurrently, and the evaluation of the

technical and management submittal can be made strictly on the basis

of its merit.

(b) Proposals shall be submitted in [insert number] copies of

each Part I and [insert number] copies of Part II.

(c) Part I--Technical and Management

Section 1: Proposal Coverage. Cover the scope of work and

general objectives which the proposal addresses.

Section 2: Tasks and Methods. Describe the principal tasks or

sub-projects to be undertaken together with a discussion of their

relationships to each other. Discuss the considerations for

selecting, performing and the time sequencing of the tasks or sub-

projects. Describe and discuss the method of personnel training and

field personnel recruitment and the method of project control to be

applied to the project to ensure timely, professional and quality

performance. The Contractor must clearly state his/her plans for

project management and in providing current and updated project

progress to HUD during those phases of Contractor performance that

require substantial coordination with HUD personnel.

Section 3: Organization and Staffing. Include an organizational

chart for the project showing the name of the project manager and

the names of key personnel. Include a brief resume for each person

shown on the special qualifications applicable to the performance of

the project. Describe the specific effort to be contributed to the

project by each of the key personnel and include a statement

expressed either in percentage or person-hours that each will devote

to the effort. Include a summation of the minimum person-hours or

person-months of professional effort to be used in completing the

project. Describe the physical facilities to be used. If

consultants, advisors or subcontractors are to be used, describe the

arrangements and include resumes of the Key personnel.

Section 4: Prior and Current Experience. Include a list of

projects currently in progress and/or completed within the last two

years which are relevant to this procurement. Include names,

addresses, and telephone numbers of contact points with these

clients. The Government reserves the right to request information

from any source so named.

Section 5: Conflicting or Multiple Use of Contractor Resources.

Include a description of the contractor's current or planned

projects that may draw upon resources or personnel, including top

management, proposed to be committed to this project. Explain how

such conflicting or multiple uses will be resolved to avoid

impairing the timely, professional, and high-quality performance of

this project. If the proposer has one or more existing HUD projects

that will run concurrently with this project, explain how the level

of attention described in the proposal will be preserved across

projects.

The Government reserves the right to downgrade the related

Factor for Award score for any proposal that does not adequately and

credibly address such conflicts or multiple uses.

Section 6: Security Investigation. The offeror shall address in

its technical proposal how it intends to manage the security of

automated systems as required by HUDAR clause 2452.237-76. This

includes developing security procedures, requesting background

investigations for employees and subcontractors as required, and

requesting investigations for replacements of such individuals as

necessary due to turnover, rotation, or other reasons.

(d) Part II--Business Proposal

Section 1: Representations and Certifications. The Offeror's

Representations and Certifications provided in Section K of this

solicitation shall be included in this section.

(End of provision)

ALTERNATE I (Insert Month, Year)

This alternate shall be used as prescribed at 2415.407(b) when

the submission of cost and pricing data are required. In such cases,

add the following Section 2 to paragraph (d) of the basic provision:

Section 2: Cost and Pricing Data. The offeror shall furnish cost

or pricing data using the SF-1411, Contract Pricing Proposal,

provided in Section L of this solicitation, and the instructions

attached to it, which are also printed at FAR 15.804-6. Round all

amounts to the nearest dollar. Your data will be subject to review

and evaluation by various Government personnel, and thus the

estimates furnished on the SF-1411 should be supported by the

required supplementary data so that the review and evaluation can be

conducted with a minimum amount of delay and effort. In particular,

ensure that the following essential elements are provided:

(i) A summary of total cost by cost element cross-referenced to

each proposed contract line item (instruction number 1).

(ii) Identification of the basis for the kinds, quantities, and

cost of all material elements proposed; and a consolidated priced

summary of individual material quantities, or a consolidated priced

bill of material (BOM), for the entire proposal. A well prepared BOM

includes: part number/description, unit cost, quantity required, any

nonrecurring costs, extended cost, and basis for the proposed price

(quotation, prior buy, similar item, etc.) (instruction number 1,

Materials).

(iii) For each subcontract over $500,000 show: source,

deliverable, quantity, price, type of subcontract, degree of

competition, basis for selecting vendor and establishing

reasonableness of price. When required, the subcontractor's cost or

pricing data must be submitted with the offeror's initial proposal.

If available and if required by FAR 15.806, the contractor should

provide the results of review and evaluation of subcontract

proposals. Though not required, the offeror should provide reasons

for omitted data/reviews with dates when the data/reviews will be

available (instruction number 1, Materials).

(iv) A Justification, submitted on an SF-1412, Claim for

Exemption from Submission of Certified Cost or Pricing Data, when

claiming an exemption from submitting cost or pricing data

(instruction number 1, Materials).

[[Page 46159]]

(v) A time phased, e.g., quarterly, annual, breakdown of labor

rates and hours by category or skill level, and the basis for the

estimates of rates and hours, e.g., historical experiences,

engineering estimates, learning curves, etc. If labor is the

allocation base for indirect costs, summarize for each overhead pool

and year (instruction number 1, Direct Labor).

(vi) In the absence of a forward pricing rate agreement or

indirect rate proposal, the contractor should show how indirect

rates were estimated and applied as a basis for evaluating the

reasonableness of the proposed rates. Support for the indirect rates

could consist of cost breakdowns, trends, and budgetary data

(instruction number 1, Indirect Costs).

(vii) Identification of all other costs by category and basis

for pricing (instruction number 1, Other Costs).

(viii) When claiming cost of money, the contractor must submit

Form CASB-CMF and show the calculation of the proposed amount

(instruction number 1, Facilities Capital Cost of Money).

(ix) Identification of cost or pricing data, i.e., data that are

verifiable and factual, and an explanation of the estimating

process. When applicable, the following items should be specifically

identified:

(A) Judgmental factors and the methods used in the estimate,

including those used in projecting from known data; and

(B) The nature and amount of any contingencies (instruction

number 2).

(x) An index referencing all cost or pricing data and

information accompanying or identified in the proposal (instruction

number 4).

(xi) For change order proposals: an estimate of the cost to

complete deleted work not yet performed; identification of the

actual or estimated cost of deleted work already performed; and an

estimate of the cost of work added (instruction number 7B).

(End of provision)

72. In section 2452.219-70, the section heading and Alternate I are

revised to read as follows (and footnote 8 is removed):

2452.219-70 Small Business and Small Disadvantaged Business

Subcontracting Plan.

* * * * *

ALTERNATE I (DEC 1992)

This alternate is required for all sealed bid solicitations

exceeding $500,000 ($1,000,000 for construction) that are not set

aside for small business. In such cases, insert the following

paragraph (d) for that in the basic clause:

(d) The contract expected to result from this solicitation will

contain the clause at FAR 52.219-9, ``Small Business and Small

Disadvantaged Business Subcontracting Plan (Alternate I).'' The

offeror submitting the apparent low bid, upon request by the

Contracting Officer, shall submit a subcontracting plan, where

applicable, which addresses separately subcontracting with small

business concerns and small disadvantaged business concerns, and

which shall be included in and made a part of the resultant

contract. The Contracting Officer will review the adequacy of the

subcontracting plan as part of the responsibility determination (FAR

subpart 9.1). Failure to submit an adequate subcontracting plan

where applicable shall make the offeror ineligible for the contract

award.

(End of provision)

73. Section 2452.226-70 is revised to read as follows:

2452.226-70 Certification of status as a minority business enterprise.

As prescribed in 2426.703, insert the following provision in all

solicitations:

CERTIFICATION OF STATUS AS A MINORITY BUSINESS ENTERPRISE

(August 1995)

Bidder, Offeror or Supplier certifies that he or she ______ is,

______ is not, (check one), a minority business enterprise which is

defined as a business which is at least 51 percent owned by one or

more minority group members or, in the case of a publicly owned

business, at least 51 percent of its voting stock is owned by one or

more minority group members, and whose management and daily

operations are controlled by one or more such individuals. For the

purpose of this definition, minority group members are:

(Check the box applicable to you)

[ ] Black Americans

[ ] Hispanic Americans

[ ] Native Americans

[ ] Asian Pacific Americans

[ ] Asian Indian Americans

74. In section 2452.232-70, Alternate I is revised to read as

follows:

2452.232-70 Payment schedule and invoice submission (fixed-price).

* * * * *

ALTERNATE I (MAR 1988)

This alternate may be used in fixed-price contracts awarded by

the Administrative Service Centers. In such cases, substitute the

following paragraph (c) for that in the basic clause:

(c) Invoices shall be submitted in an original and three (3)

copies to the office identified on the cover page of the contract

(SF-26 or SF-33). To constitute a proper invoice, the invoice must

include all items per FAR 52.232-25, ``Prompt Payment.''

75. In section 2452.232-71, Alternate I is revised to read as

follows:

2452.232-71 Voucher submission (cost-reimbursement).

* * * * *

ALTERNATE I (MAR 1988)

This alternate may be used in cost-reimbursement contracts

awarded by the Administrative Service Centers. In such cases,

substitute the following paragraph (a) for that in the basic clause:

(a) The Contractor shall submit, on a monthly basis [Contracting

Officer may substitute a different time frame, if appropriate], an

original and three (3) copies of each voucher. In addition to the

items necessary per FAR 52.232-25, ``Prompt Payment,'' the voucher

shall show the elements of cost for the billing period and the

cumulative costs to date. All vouchers shall be submitted to the

Contracting Officer specified on the cover page of the contract (SF-

26 or SF-33).

75a. In section 2452.237-77, footnote 9 is redesignated as footnote

8.

PART 2453--FORMS

76. The authority citation for part 2453 is revised to read as

follows:

2452.237-77 [Footnote 9 redesignated as Footnote 8]

Authority: 40 U.S.C. 486(c); 42 U.S.C. 3535(d).

77. Section 2453.213-71 is revised to read as follows:

2453.213-71 HUD Form 2542, Purchase Order and Payment Authorization.

As prescribed in 2413.505-2(b), Contracting Officers may use HUD

Form 2542 for small purchases charged to the FHA Fund.

2453.213-72 [Removed]

78. Section 2453.213-72 is removed.

79. A new section 2453.237-70 is added, to read as follows:

2453.237-70 HUD Form 24002, GTR Performance Assessment (Final).

As prescribed in 2437.205, Government Technical Representatives

shall use HUD Form 24002 to document the contractor's performance and

the utility of products or services delivered. This form may also be

used for other contracts.

Dated: August 2, 1995.

Marilynn A. Davis,

Assistant Secretary for Administration.

[FR Doc. 95-21767 Filed 9-1-95; 8:45 am]

BILLING CODE 4210-01-P