1 Procurement Policy, Procedures, and Practices— what is required and what is the difference Michael S. Gifford, C.P.M., CPSD 2010 © Instructor Michael.

1

Procurement Policy, Procedures, and Practices—what is required and what is the difference

Michael S. Gifford, C.P.M., CPSD 2010 ©

InstructorMichael S. Gifford, C.P.M., PHM

Housing Agency Procurement Assistance (HAPA)Las Vegas, NV

Office(866)526-7790 Cell(702)236-0275E-mail: [email protected]

2



What will we accomplish during this presentation?

A better understanding of what HUD and the public requires pertaining to procurement policies, procedures.

A renewed commitment to ensure that housing agency procurement policies and procedures ensure open, fair, reasonable and justified HUD-compliant procurement.

An ability to locate in the regulations what HUD wants pertaining to housing agency policies and procedures–hence, a better understanding of HUD requirements.

As a result, improved relationships with our Board, our ED, our clients, our contractors, and the public at large.

An understanding of Gifford’s Gospels.

3



Gifford’s Gospels

No. 1: “If it ain’t written, it don’t exist.

No. 2: “There are no coincidences in life—everything happens for a reason.”

No. 3: “Whatever we do must be open, fair, reasonable and justified.”

No. 4: “Contractors are not our friends—they are our partners.”

No. 5: “Nothing is free—there is a price to pay for everything.”

No. 6: “Be prepared—if something can go wrong, it will happen at the worst possible moment.”

No. 7: “Luck is where preparation and opportunity meet.”

No. 8: “He/she who writes the contract, the contract is in favor of.”

4



Herein we will make references to:

24 CFR 85.36: aka the Common Rule. Issued by Congress. Hereinafter “Part 85.36.” Specific references herein within “{ }.”

HUD Handbook 7460.8 REV 2: 7460.8 issued by HUD to explain Part 85.36 in further

detail. Hereinafter “7460.8” or “HPH.” Specific references herein within “[ ].”

<Many Sample Forms developed by HAPA and HUD are available at no charge on procurementassistance.org>

5



Within the Handbook’s or the CFR’s:

Important!!!!! Remember, therein: [HPH: 1.2]

“Shall” and “must” mean that an action or item is mandatory and is required by statute or regulation.

“Should” and “may” mean that the action or item serves to provide guidance and/or best practices but is not mandatory.

!!!PLEASE NOTE-BEWARE!!! HUD has used the term “should” a number of times in

the HPH and then in another part of the HPH uses the term “shall” or “must” in reference to the same issue—an auditor WILL most likely go with the stricter reference as the requirement.

6



We must understand the difference betweenPolicy Procedure Practice

Definitions (per Webster’s New World Dictionary):

Policy: “Wise management.” “A principle, plan, etc. as of a government.”

Procedure: “The act or method of proceeding in an action.”

Practice: “To do or engage in frequently; make a habit of.”

7



Definitions (per Gifford)

Policy: Typically approved by the Board (hence, we do not revise it

often—perhaps once per year at most). Serves as a general plan, listing the highlights.

Procedure: Typically approved by the Executive Director. Serves as a detailed plan, listing step-by-step requirements on

how to do work items.

Practice: Typically “approved” by individual staff. It is what staff actually do. Once discovered: (1) if the practice is better, adjust the

procedure; (2) if the procedure is better, discipline the individual staff.

8



Relationship of local or State laws with Federal law:

PHAs must comply with the stricter of Federal rules and State/local rules. [HPH: 1.5/13.1]

States. {Part 85.36(a)}

“When procuring property and services under a grant, a State will follow the same policies and procedures it uses for procurements from its non-Federal funds. The State will ensure that every purchase order or other contract includes any clauses required by Federal statutes and executive orders and their implementing regulations.”

Therefore, one procurement policy only!

9



Per Section 2.2.A of HUD Procurement Handbook 7460.8 REV 2: “PHAs are required to establish and follow a written procurement policy consistent with 24 CFR 85.36.”

HUD Sample Procurement Policy found in Appendix 1. GIFFORD COMMENT: I recommend utilizing this sample policy as a base, making appropriate adjustments based on needs.

“Need not contain detailed working-level procedures.” GIFFORD COMMENT: I strongly recommend you NOT combine policy and procedures.Policies are approved by Boards and are typically only revised annually or less.Procedures are approved by Executive Directors and need to be revised often as-needed (daily; weekly; monthly; etc.).Hence, combining policy/procedure would require Board approval to revise procedure—not a good thing.

10



Per Section 2.2.A of HUD Procurement Handbook 7460.8 REV 2: “Some PHA’s prefer to combine the policy and procedure into a single publication for the convenience of staff.” This is NOT more convenient—it is less convenient (see above)!

“It is not required that the procurement policy be submitted to HUD for approval.”

“PHAs that wish to be exempt from prior HUD approval of certain individual procurement actions can have their procurement policy reviewed/approved by HUD.” GIFFORD COMMENT: Probably not a bad thing to do.

11



Per Section 2.2.B of HUD Procurement Handbook 7460.8 REV 2: “PHAs can also self-certify that their procurement system meets all HUD requirements, which would also exempt them from certain HUD review requirements.”

GIFFORD COMMENT: I strongly recommend you NOT do this “self-certification.” This is an invitation for a HUD audit (if any housing agency told me that they were 100% compliant with all procurement-related HUD requirements, I would certainly be curious as to how that agency had accomplished such a wonderful thing, something that many very accomplished housing agencies, despite great effort and resources, are not able to do).

Please see my sample draft procurement policy, Sample Form SF-40b on procurementassistance.org.

12



Procurement Policy Definition: “Wise management;” “a principle, plan, etc.

as of a government.”

I strongly recommend utilizing the HUD Sample Procurement Policy as a base, then making appropriate adjustments to the Sample that the PHA needs. Just ensure that the adjustments are appropriate!

My recommendations (comparing the HUD Sample Procurement Policy with my re-draft of the HUD Sample Procurement Policy):

The following information appears in the “view” area on every page:Document Title: “Procurement Policy”HA nameRevision datePage number

13



Procurement PolicyMy recommendations (comparing the HUD Sample Procurement Policy with my re-draft of such):

Table of Contents (NOTE: The HUD Sample does not have a T of C’s)

Utilize government numbering (e.g. 1.0; 1.1; 1.1.1)Government number is superior to alternative methods (e.g. I; A; (1); (a); etc.) in that (1) you always know where you are in the Policy; and (2) revisions, additions and deletions do not require a complete renumbering of the revised section(s).

On my Draft I have also entered some additional bolded sub-headings and sub-divided some of the HUD-Sample paragraphs for clearer viewing (see Section 2.1, General.

14



Procurement Policy My recommendations (comparing the HUD Sample Procurement Policy with my re-draft of such):

The HA needs to fill-in any of the highlighted in yellow areas.

Exclusions: “Section 8,” “HAP contracts,” or “non-program income, e.g. fee-for-service revenue under 24 CFR Part 990,” each of which are “subject to applicable State and local requirements.” GIFFORD COMMENTS: Remember:

HUD wants to know, “How did you protect the government’s money;” and

There are two courts to be concerned about:•The Court of Law; and•The Court of Public Opinion (newspapers).

15




“Gratuities, Kickbacks, and Use of Confidential Information.” GIFFORD COMMENTS: Revised the allowance of “items of more than $25 in value” to “items of more than nominal value (i.e. inexpensive hat with logo).” Another problem: what time limit did the HUD Sample Policy allow for the “$25”—per minute; per hour; per day; per week?

“Competitive Proposals, Conditions for Use.” GIFFORD COMMENTS: I added, “As detailed within Section 7.2.B of HUD Procurement Handbook 7460.8 REV 2, ‘Only under limited circumstances would construction services be procured by competitive proposals.’”

Misuse of RFP method for construction.

16




“Bonding Requirements.” GIFFORD COMMENTS: Be sure to revise the “$100,000” to a lesser amount if required by State statute.

“Suspension and Debarment.” GIFFORD COMMENTS: Added the following very important requirements to this section: “Prior to issuance of a contract, HA staff shall, as detailed within Section 10.2.H.1 and 10.2.H.2 of HUD Procurement Handbook 7460.8 REV 2, conduct the required searches within the HUD Limited Denial of Participation (LDP) system and the U.S. General Services Administration (GSA) Excluded Parties Listing Service system and place within the applicable contract file a printed copy of the results of each such search.”

17



Procurement PolicyMy recommendations (comparing the HUD Sample Procurement Policy with my re-draft of such):“Contract Clauses.” GIFFORD COMMENTS: Added the following Section 12.3: “Required Contract Clauses: The HA shall ensure that each contract executed by the HA contains the required contract clauses detailed within 24 CFR 85.36(i).”

“Self-certification.” GIFFORD COMMENTS: I deleted the following section when I did my draft: “The HA self-certifies that this Procurement Policy, and the HA’s procurement system, complies with all applicable Federal regulations and, as such, the HA is exempt from prior HUD review and approval of individual procurement action.” My opinion, NOT A GOOD IDEA! Who is really 100% compliant!?An invitation for an audit.

18



An additional related useful form: Procurement Standards

Please see my Sample Form SF-40b on procurementassistance.org.

Serves as an abbreviation of the Procurement Policy, a condensed version to help staff understand the Policy better.

Does not replace procedures; however, as serve as a useful segway between Policy and Procedure.

Includes many references to the HUD Procurement Handbook and the actual Procurement Policy.

19



Procedures Please see my Sample Form SF-38 on

procurementassistance.org.

Definition: “The act or method of proceeding in an action.”

Whereas Policies are a general statement of requirements, procedures are a detailed step-by-step statement of requirements (“the act of proceeding in an action”).

Remember: Keep It Simple, Staff (KISS)As with written policies, the following information appears in the “view” area on every page of a procedure manual:

Document Title: “Procurement Procedures”HA nameRevision datePage number

20



Procedures:Remember: Keep It Simple, Staff (KISS)

For most HA’s, most procedures can be written on a page or two or less.

Don’t make reference to specific names of staff but to positions.

Where appropriate within a procedure, make specific reference to the HUD Procurement Handbook or to a CFR.

As with the Policy, I recommend a Table of Contents.

As with the Policy, I recommend utilizing government numbering (e.g. 1.0; 1.1; 1.1.1)

Government number is superior to alternative methods (e.g. I; A; (1); (a); etc.) in that (1) you always know where you are in the Policy; and (2) revisions, additions and deletions do not require a complete renumbering of the revised section(s).

21



ProceduresMy Table of Contents includes:Procurement PlanningPurchase Requests and JustificationPurchase OrdersCompetitive SolicitationsNoncompetitive ProcurementsContractsSection 3Board of Commissioner’s ApprovalsReports/LogsOutreach/Supplier DiversityDefinitions and MeaningsPolicies & Procedures ManualSample Forms

22



Practice

Definition: “to do or engage in frequently; make a habit of.”

When I go to a HA to provide technical assistance:

Review the written procurement policy and written related procedures; then

Without referring to policy or procedure, ask staff what they are actually doing (their practice).

23



Practice

If what staff is doing is different from the written policy or procedure, two things must be considered:

If what staff is actually doing is an improvement to the policy/procedure and is allowable, consider revising the policy or procedure to fit the practice; however

If what staff is actually doing is not an improvement to the policy/procedure and/or is not allowable, then staff must be disciplined (e.g. verbal warning; written warning; probation; termination).

When such “violations” are discovered by a supervisor, DO NOT make threats! Stop—think—consider. Remember the Gospel: “There are no coincidences in life—everything happens for a reason.”

24



Practice

A HA must have an internal procedure to address the preceding so that we do not discover such things after they happen but as they happen.

Such procedure must be in writing and must address how staff initiate such procedures and must detail staff’s responsibility to do so.

Sample: “It is the duty and responsibility of each staff member to advise his/her supervisor when he/she conducts assigned work activities in a manner inconsistent with the set policy or procedure. Such inconsistent practice must only be conducted by the staff member if he/she reasonable feels that he/she has not other alternative and must be reported to the supervisor in writing within 24 hours of such. Such report shall also detail the facts surrounding the inconsistent practice and a recommendation as to how to improve the set policy or procedure to be more reasonable or practical.”

25



Practice

Potential revisions addressed at each regularly staff meetings.

When presented with proposed revisions, consider each carefully. If it works better, make the revision and ensure that “everyone gets the memo!”

In any case: there must be a clear written policy and procedure; the HA must periodically ensure that each is being

followed; and If necessary, there must be a willingness to

discipline.

26



An additional useful item: Procurement and Contracts Resource ManualSee Sample Form SF-39, Procurement and Contracts Resource Manual Index, on procurementassistance.org

Kind of mid-way between Policy and Procedure.

Designed to be one place where all applicable procurement- and contracts-related policies, procedures, regulations, and statutes and stored (maintained).

Includes sections for:

Applicable internal HA documents, including, but not limited to:•Procurement Policy•Procurement Standards•Procurement ProceduresApplicable Federal Regulations/HandbooksApplicable State Statutes

27



Several additional useful itemsSee Sample Form SF-26a, Major Elements of a Compliant Procurement, on procurementassistance.org.

A snap-shot of the procurement process.

See Sample Form SF-26b, Procurement Flow Chart, on procurementassistance.org.

A check list to ensure that a HA is doing the things that it should be doing.

28



I hope this information is of a help!

Be sure to visit procurementassistance.org to obtain, at no charge, many forms and competitive solicitation (QSP’s; IFB; RFP’s; RFQ’s) documents.

Thank you!

1 Procurement Policy, Procedures, and Practices— what is required and what is the difference Michael S. Gifford, C.P.M., CPSD 2010 © Instructor Michael.

Documents