Does a subrecipient have to procure for construction to build a public building if CDBG funding was used solely to acquire land? If yes then can it sole source the contractor, if the contractor was already competitively procured and awarded the sole rights to build public buildings from the state?
Date Published: May 2015
CDBG subrecipients are required to follow federal, state and local procurement requirements when choosing a construction contractor, regardless of whether a grantee competitively procured contractors independently. For subrecipients the procurement rules are found at 84.40-84.48; 24 CFR Part 85.36 applies to grantees. They are cross referenced in the CDBG regulations at 24 CFR 570.502. Even though CDBG funds are being used in the acquisition, procurement requirements apply to the project itself which is a public facility. The subrecipient cannot simply select the contractor procured by the state. As states and units of general local government are subject to different procurement standards, there is no presumption that a state agency's procurement standards will conform to 24 CFR 85.36(b). The selection of the independent contractor providing common services is usually based on price (i.e., the lowest quote meeting specifications wins the bid). It is not clear whether the State's contractor was selected on that basis. Absent full and open competition consistent with the requirements of 24 CFR 85.36, there is no basis to determine the reasonability of the contract price. Therefore, the subrecipient may not piggyback the state’s procurement.
Please also note that federal acquisition requirements under the Uniform Relocation Assistance and Real Property Acquisition Policies Act are triggered. Documentation of the sale, either voluntary or involuntary, must be in the project file. If you need more information on relocation, the HUD Handbook 1378 might be useful.