WPC 2T ZB 0HP DeskJet 500x6X@QX@Ыx6X@QX@<6X9`("Courier 10cpiXA\  PP(hH  Z 6Times New Roman RegularA\  PP(hH  Z 6Times New Roman Regularx*0 x7),h  Z 2CG Times (W1) Regular2"|S#A\  PP##A\  PP#`4 (#D#x*0 x7#Approved 6/20/96CONTRACT PROCEDURES FOR THE SOUTHERN APPALACHIAN MOUNTAINS INITIATIVE *  OVERVIEW OF CONTRACTS AND CONTRACT ADMINISTRATION ă What is a contract? Who has authority to manage a contract? How will contracts be awarded by the Southern Appalachian Mountains Initiative (SAMI)? These questions can be answered in a variety of ways, all of them correct. But for the purposes of the SAMI program, the following definitions and procedures have been adopted as "correct" for SAMI contracting activities. Contract management or administration includes all functions relating to a contract from the time it is awarded until the final payment is made and it is closed out. Preaward refers to the solicitation, proposal evaluation and contract award phase. Procedures used by SAMI through each of these actions are determined to some extent by the source of money that is used to fund the contract. If Federal dollars are the primary source, then Federal law requires that SAMI adhere to the 40 Code of Federal Regulations (CFR) Part 33, Procurement Under Assistance Agreements (Attachment A). The Federal government and SAMI define a contract as "a mutually binding legal relationship obligating the seller to furnish supplies or services and the buyer to pay for them." This basic definition will apply to SAMI contracts. To be legally enforceable, a contract must be: (1) an agreement (2) between competent parties (3) for a valid consideration (4) to accomplish a lawful purpose (5) with terms clearly set forth (6) in the form required by law. Without these six elements, a contract is not a legal document. The agent of the contract (the person authorized to act for or represent SAMI) may be the SAMI Coordinator, the Technical Oversight Committee (TOC) Coordinator, the Chair of the Operations Committee (OC), or a designee of any of these three individuals, depending on the purpose of the contract. The agent is called the contracting officer (CO) or work assignment manager (WAM). These terms are used synonymously in this document. An alternate CO or WAM should be designated to act in the absence of the CO or WAM. Duties of the Parties The parties primarily involved in the contract process are the Governing Body, the Chair of the Governing Body, the SAMI Coordinator, the TOC Coordinator, the Treasurer, and a Selection and/or Evaluation Committee. Approval by the Governing Body must be obtained as the first step in awarding any contract over $25,000, unless the Governing Body authorizes the Operations Committee to award contracts for higher amounts. The Operations Committee shall approve all contracts under $25,000 and shall make a recommendation to the Governing Body on whether or not to approve contracts over $25,000. The Governing Body shall also approve or choose the final choice of the contractor if the Selection Committee cannot reach consensus on a contractor. The SAMI Coordinator and the TOC Coordinator are the only SAMI staff with the authority to sign a contract and act as SAMI's agent in the management of that contract. The role of the contract officer is explained more fully in the following section. The Treasurer disburses funds under the rules of the SAMI Bylaws. The Treasurer ensures that invoices are reviewed and approved in writing by the contracting officer prior to payment. Invoices must be paid within the time frame specified in the contract. The Treasurer must be contacted to ensure the availability of sufficient funds before the CO can obligate funds. The SAMI is not bound by the actions of any unauthorized person who provides direction to a contractor. Persons who commit the SAMI, without proper authority to do so, may be personally liable to the other party in the contract. Role of the Contracting Officer The contracting officer oversees the contract award procedure from beginning to end and is the authority when questions and disputes arise. The contracting officer is the only person who has the authority to:   1.Sign the contract 2. Obligate funds (the approval of the Governing Body is required for $25,000 or larger; the Treasurer must ensure the availability of funds for any expenditure) 3.Issue work assignments (i.e., provide direction) 4.Modify any contract terms or conditions 5.Terminate the contract 6.Accept deliverables (after review and acceptance by appropriate SAMI committee or work group) During the contract management phase, the contracting officer's primary role is to monitor contract performance from both a technical and a financial standpoint. The contracting officer should obtain technical review of work assignments/deliverables and concurrence for modifications from the appropriate SAMI committee or work group. Technical direction to the contractor must come from the contracting officer or alternate. The Chair of the lead subcommittee shall serve as the alternate contracting officer. Contract performance is monitored against the Statement of Work and the Work Plan submitted by the contractor. As part of contract administration, the contracting officer is responsible for coordinating review of deliverables and contract documents such as Statements of Work with the appropriate SAMI committees or work groups. Since the contracting officer most closely oversees contractor performance, he or she is also responsible for reviewing the monthly technical and financial reports and assisting the Treasurer in voucher certification. Role of the Treasurer The primary role of the Treasurer is to ensure prompt and proper payment of all vouchers and invoices. The Treasurer must coordinate review of the voucher with the contracting officer who must approve it before payment can be made. Payments shall be made within the time specified in the contract. The Treasurer shall be responsible for maintaining the proper and correct documents in the official file for audits of SAMI fiscal records. The Treasurer tracks all expenditures and ensures the availability of funds before commitment by the CO. The Treasurer shall not permit any expenditures without sufficient funds to cover them. The Treasurer reviews and approves all invoices. & CONTRACTS ă SAMI shall award contracts only to responsible contractors that possess the potential ability to perform successfully. "Responsible" mean that the contractor has the financial resources, technical qualifications, experience, organization and facilities needed to carry out the project, can meet the completion schedule, and has a satisfactory performance record. SAMI may use any one of at least five different types of contracts (see Attachment B). The differences between them must be understood in order to understand SAMI's and the contractor's responsibilities since these differ from one contract type to another. Before discussing the different contracts, all SAMI contracts must contain five major elements which include: A.` ` ` Administrative Details. These include such items as the name and address of the contractor, the name and address of the contracting officer and the name and address of the Treasurer. B.` ` ` Contract Conditions. These include information such as the amount of the contract, the period of performance, the level of effort or the minimum and maximum amount of work that can be ordered. C.` ` ` Work Requirements. This is the technical part of the contract most familiar to most SAMI members because it contains the Statement of Work (usually written by SAMI members or committees), contractor personnel qualifications, and other technical details.D.` ` ` Standard Terms and Conditions. These are frequently referred to as "too" clauses and deal with issues such as reporting requirements, fees, technical direction, progress reports, and contract changes. The standard clauses used will depend on the type of the contract. These may address:  1. SAMI's conflict of interest statement 2. Limitation of Cost 3. Terms of Level of Effort/Cost Reimbursement 4. Statement of Ownership of Information and Products and Publication Rights 5. Nonexclusive Agreement (contract not to be construed as an exclusive agreement) 6. Term Clause (dates contract begins and ends) 7. Indemnification Clause 8. Nondiscrimination Clause 9. Force Majeure (SAMI held not liable) 10. Statement of Work/Work Assignment 11.Designated Contracting Officer 12.Key Personnel 13.Organizational Conflicts of Interest 14.Subcontracts (Permission To or Not) 15.Deliverables Such As Monthly Progress Reports 16.Acceptance Criteria, Warranty 17. Option to Terminate, Extend or Modify the Contract  E.` ` ` Specialized Terms and Conditions. These are terms and conditions above and beyond standard terms. They deal with matters particular to a specific contract. Contract Types Attachment B provides a description of five contract types with the advantages and disadvantages to SAMI of each. Briefly, most SAMI contracts will fall into one of these five types which are: 1.Firm Fixed Price 2.` ` ` Cost Reimbursement (Cost, Cost Plus Fixed Fee, Cost Plus Award Fee) 3.TimeandMaterials 4.Labor Hour 5.Indefinite Delivery/Indefinite Quantity The type of contract to be used depends on the work to be performed. The contracting officer should be aware of the different types of contracts because contract management differs from one type to another.  PROCEDURES FOR AWARDING A CONTRACT ă The SAMI's goal is to have fair and unbiased selection for each contract awarded. SAMI has three legal options for awarding contracts. These are: (1) sole source, (2) solicitation of bids from a list of qualified contractors, or (3) full competitive process. The method used depends on the amount of the contract, the type of funding for the contract, and the type of contract. The 40 CFR Part 33 should be consulted for requirements pertaining to any contract funded with Federal government derived money. This money may be direct in the form of a grant to SAMI or indirect such as from a state providing funds that originally were part of a federal grant to the state. The sole source process is one that should be used with care and only in specific circumstances. These circumstances are: (1) because of unique requirements, only one source can provide the goods/services/data needed, (2) SAMI's need for a product is so urgent that a delay would cause unacceptable compromises in accomplishing SAMI's mission, (3) the procurement is for $24,999 or less because the full competitive process would be prohibitively expensive. Solicitation of bids from qualified contractors means that SAMI can use a list of prequalified persons or firms. The contracting officer can request technical proposals from all or the most qualified after ranking them according to specific preset ranking factors. The SAMI committee or work group involved shall then evaluate and select either the best qualified or three best qualified technical proposals for meeting with SAMI's selection committee which will choose the best candidate based on predetermined evaluation criteria. The role of the selection committee is discussed in the section on "Technical Evaluation Process." The full competitive procurement process provides maximum open and free competition. It also requires the longest lead time. As a general rule of thumb, a start date should be expected to be six months from the initiation of the competitive procedure. To avoid any appearance of bias or unfairness, specific steps should be followed consistently. These steps are: 1. Solicit bids A. Advertise (e.g., Commerce Business Daily (CBD) and one or two relevant technical journals) for 30 days. B. Send out RFP (Request for Proposals) 15 days after notice first appears in CBD. Goes to requesters and those on a list (if we have a list). C. Allow not more than 30 days for bidders to respond after advertisement closes. 2. Develop RFP A. Can be developed by individual with full review and approval of appropriate committee or work group or by committee. B. Must contain all the rules, SAMI's conflict of interest disclosure policy, expectations of contractor, total dollar amount of contract (e.g., cannot exceed $xxxx), billing instructions, statement of work, and evaluation criteria. C. RFP is approved by the appropriate SAMI committee (e.g., Public Advisory Committee, Policy Committee, Technical Oversight Committee); the Operations Committee shall approve if consensus cannot be reached within the committee 3. Solicitation A. RFP released. B. Due date set for receipt of questions from bidders less than the deadline for receipt of proposals. C. May choose to have a preproposal conference with potential bidders for answering questions or may answer questions in writing by providing all questions and answers to all bidders simultaneously 4. Proposals Received A. Evaluation Panel (Peer Review Panel) established before proposals are received. Should have representatives of each committee, may include people from outside SAMI, should name a chair personthe chair person of the lead committee is recommended . B. Evaluation Panel reviews proposals. May send out interrogatories to bidders. C. Evaluation Panel reports recommendations to Selection Committee D. Selection Committee may serve as Evaluation Panel 5. Negotiations (optional) A. Best and Final Offers Requested B. Best and Final Offers received and evaluated by Evaluation Panel 6. Award Phase A. Selection committee chooses contractor. For a time and materials type contract, the award normally goes to the low bidder. Other types of contract proposals are evaluated on technical merit as well as cost. The Selection Committee should award the contract by consensus of the members. If consensus cannot be reached, the recommendations of the Selection Committee will be sent to the Operations Committee which will choose the contractor.  B. Contractor notified C. Contract mailed to Contractor for signature; the original contract is kept on file in SAMI's business office for financial audit purposes D. Contract awarded The Request for Proposals (RFP) is the key document to the solicitation process. It must contain language that clearly describes the supplies or services being procured; the required contractor capabilities, experience, and requirements; and the criteria and the weighing of that criteria to be used in the evaluation of responses. The description or specifications for the procurement is normally called the Statement of Work or Scope of Work (SOW). It may tell the contractor "what" SAMI wants, but not how to do it or it may tell the contractor both "what" SAMI wants and "how" to do it, or it may contain elements of both. An adequately stated SOW is the most important attachment to the RFP. Normally, the SOW will contain a general statement explaining the background, goals and objectives; technical considerations, a detailed description of work, specialized reporting requirements, deliverables, milestones, and acceptance criteria. The SOW should not contain any internallydeveloped cost estimates and should not direct the contractor to use any specific employee, consultant or subcontractor. The contract will be based on the SOW and care must be taken to include all deliverables from the SOW in the contract. In the subsequent Work Plan, the contractor may deviate from the SOW with an explanation. Any changes by the contractor must be justified. The contracting officer, after consulting with the lead committee, shall approve or disapprove of the changes.Great care must be taken throughout the preaward process to avoid any appearance of bias, conflict of interest, or unethical practice. Attachment C is the Standard of Conduct for SAMI participants involved with contractor selection. In addition, the RFP and proposals should be reviewed by at least two nonSAMI affiliated people selected by the appropriate committee or work group. The Selection Committee should be given copies of the Standards of Conduct, and each member should sign a conflict of interest statement (Attachment D is an example). The rationale for the selection of the contractor should be documented for the files. Once the RFP is released, questions concerning the work should not be answered unless the contracting officer has a preaward meeting with all bidders present so that all questions and answers are heard by all bidders or answers all questions in writing to all bidders simultaneously to avoid any appearance of "unfair advantage". Technical Evaluation Process The evaluation process requires objectivity, expertise, rationale judgement, and integrity. If any of these are lacking, the results could be protests, delay of award and, in extreme circumstances, a lawsuit. The proposals received by the SAMI become the property of SAMI. Issuing a request or accepting responses to a request do not commit SAMI or any SAMI participant to fund any proposal or to respond in any way to a response to such a request. Before the RFP is issued, evaluation criteria must be established and must be adhered to during the evaluation process. Before the proposals are reviewed, the contracting officer issues the evaluation criteria to the reviewers on the Evaluation Panel who rate the proposals based on the evaluation criteria. Typical evaluation criteria examine the technical approach, corporate experience, the management plan, personnel, and past performance. They are stated in the RFP. The Selection Committee may choose a contractor based on the review of the proposals alone or may meet with the top candidates (probably not more than three). Both price and technical merit are important considerations in the selection of the contractor. Different circumstances may weight one more than the other, but neither should be the sole deciding factor. Selection of the contractor will be made by consensus of the Selection Committee and then approved by the appropriate SAMI committee. The contract is then awarded by the contracting officer to the contractor and work begins. Nonsuccessful bidders must also be notified in writing of the award. n  CONTRACT MANAGEMENT/ADMINISTRATION ă Although the contracting officer is responsible for management of the contract and has direct contact with the contractor, deliverables should be reviewed and approved by the appropriate committee or designees. The first step of the contracting officer is to review the requirements and specific obligations set forth in the contract. It is a fundamental rule of contract law that the obligations of the parties (the SAMI and the contractor, in this case) are established and governed by the language of the contract what it says, not what it was meant to say. Therefore, the contract must spell out in detail what is required of the contractor, what the deliverables are, the deadlines, and what is considered acceptable performance or product. The contracting officer is the only person who should provide direction. Neither the contracting officer nor any other member of the SAMI can: (1) institute work outside the contract scope, (2) institute a contract change (differs from a modification), (3) increase or decrease the estimated cost of the contract, and/or (4) alter contract performance without proper modification of the contract and due process within the SAMI. Any modifications to the contract must be made in writing to the contractor by the contracting officer. Any financial changes must be approved by the Chair of the Governing Body or be within the budget limits approved by the Chair. An important rule of contract management is never to interfere with the performance of the contract. The contracting officer, in monitoring the contract can review the work, have phone conversations and meetings with the contractor, compare progress with the work plan schedule, review reports and deliverables, and evaluate contractor performance. The contracting officer can discuss with the contractor what needs to be done, but not how to do it unless specified in the contract. Should performance problems arise, the contracting officer should immediately bring this to the attention of the contractor in writing. The contractor has a set period of time established by the contracting officer to correct the problems. If the problems are not corrected to the satisfaction of the contracting officer, the contracting officer may withhold payment until satisfaction is achieved or terminate the contract. Termination is only a last resort. Termination  The SAMI has the right to terminate contracts for either of two reasons: default of the contractor or convenience of the SAMI. In a termination for convenience, specific actions to be taken are outlined under the Termination for Convenience clause of the contract. The first step is to notify the contractor in writing of (1) the effective date for the termination; (2) the extent of the termination identifying what, if any, of the work should be continued; and (3) any special instructions. This notice should clearly indicate that the contract is being terminated for the convenience of the SAMI. Termination for default is a contractual right if the contractor fails to perform its contractual obligations. The contracting officer should exhaust all reasonable efforts to prevail upon the contractor to correct whatever problems exist before terminating for default.   Contract Closeout When the time comes to close out the contract, the contracting officer is responsible for ensuring that all technical requirements of the contract have been met and that the final report and all other deliverables have been received and accepted. These products of the contract and records are then SAMI's property. The contracting officer should also examine and approve the final invoice for payment.  ATTACHMENT A 40 CFR PART 33, PROCUREMENT UNDER ASSISTANCE AGREEMENTS  This document is not included due to its length. Please reference the federal regulations. ATTACHMENT B TYPES OF CONTRACTS FIRM FIXED PRICE CONTRACTS  Usually used for supplies or for services at a small level. 1.SAMI pays fixed price (established before award) which is not subject to adjustment regardless of contractors cost experience. 2.Used when:  Reasonably definite design or performance specifications  A fair and reasonable price can be established at the outset 3.Advantages to Contractor:  Potential for higher contractor profits  Minimum SAMI control  Fewer administrative costs 4.Disadvantages to Contractor:  Greater assumption of financial/technical risks  Vigilance is required to initiate and substantiate change claims 5.Advantages to SAMI:  Contractor bears risk of performance; SAMIs risk is fixed and limited 6.Disadvantages to SAMI  No right to issue technical direction  COSTPLUSFIXEDFEE CONTRACTS Usually used with universities or other nonprofit organizations. 1.SAMI pays reasonable, allowable cost, plus a negotiated fixed fee (profit). Fixed fee does not vary with actual costs, but may be adjusted for changes in work performed 2.Used when:  Performance desired cannot be clearly specified AND  Accurate cost estimates are impossible 3.Advantages to Contractor:  Lower cost risk (Best efforts only)  Reduced Liability for SAMI property 4.Disadvantages to Contractor:  Maximum involvement by SAMI  Lower fee (profit) because of lower risks     @B-@5.Advantages to SAMI:  Greater flexibility, greater control (some rights to give technical direction) 6.Disadvantages to SAMI  SAMI assumes greater risk  Greater resources required to monitor costs and performance    TIMEANDMATERIALS AND LABORHOUR CONTRACTS Least preferred contract type. 1.SAMI pays a fixed rate for each hour of direct labor worked by contractor up to negotiated ceiling on the total price (TimeandMaterials contracts also pay for materials at cost). Indirect costs and profit are included in the fixed hourly rates. 2.Used when:  Engineering and design services  Repair, maintenance, or overhaul work  Emergency situations 3.Advantages to Contractor:  Potential to maximize profits  Minimal Risk  Fewer administrative costs 4.Disadvantages to Contractor:  Constant SAMI surveillance during performance 5.Advantages to SAMI:  Greater flexibility and control 6.Disadvantages to SAMI  Potentially high cost in terms of cost and surveillance required  INDEFINITE DELIVERY/INDEFINITE QUANTITY CONTRACTS 1.Orders are placed against the contract after award. Orders specify time and place of delivery and quantity to be delivered. 2.Three types:  Definite Quantity: Definite quantity of specified supplies or services for a fixed period. ` ` ` © Requirements: Filling all requirements for specific supplies or services during contract period; sets maximum limit; May et minimum. ` ` ` © Indefinite Quantity: Indefinite quantity of specified supplies or services, providing for a  minimum and a maximum quantity 3.Used when the exact time or place of delivery or quantity required is not known at the time of the contract award. May be used for either supplies or services. 4.Advantages to Contractor:  Guaranteed minimum quantity  Potential to maximize profits 5.Disadvantages to Contractor:  No control over scheduling of orders  No guarantee of orders beyond contract minimum  Possible substantial amount of SAMI surveillance  Requires high degree of management involvement 6.Advantages to SAMI:  Guarantees SAMI ability to purchase within contract range (minimum and maximum quantity)  Great flexibility and control over scheduling of orders 7.Disadvantages to SAMI  Requires SAMI purchase of minimum quantity at specified price  Requires substantial amount of SAMI surveillance  ^%ATTACHMENT C ! STANDARDS OF CONDUCT ă Anyone directly involved with any of SAMI's contracts is expected to avoid any activity or situation which creates even the appearance of impropriety or conflict of interest. Specifically, he or she is expected to adhere to standards of conduct such as: © no participation in any decision where the SAMI member or a close relative or the SAMI member's employer has financial interest, © no solicitation or acceptance of gifts, entertainment, or favors from a contractor, © protecting information that the contractor considers to be confidential whether so marked or not, © treat all firms with objectivity and equal conduct. There should not be any "outside socializing" with contractor personnel, © the contracting officer, evaluation committee, and selection committee members must maintain the integrity of the competitive process and the independence of the contractors' proposals by not divulging and confidential procurement information before, during, or after an acquisition. ATTACHMENT D CONFLICT OF INTEREST STATEMENT To the best of my knowledge, neither I nor any member of my family have direct financial or employment interest in any of the firms submitting proposals for consideration and evaluation, which conflicts substantially with my participation in the selection process. In the event that I later become aware of such a conflict of interest, I agree to report this to the (lead committee) Chair and SAMI Coordinator. SIGNATURE ______________________________________________DATE __________________________ Do you believe that there is any potential or actual conflict of interest that may result in contracting with any of the offerors? YES __________NO ___________ If yes, please explain: ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________