We have difficulty obtaining sufficient responses for a truly competitive bidding process for our CDBG rehab program. Our policy is to have a minimum of two bids plus our internal cost estimate which meets state code. However, occasionally we have only one bid, necessitating a costly and time consuming rebidding process. Is it acceptable to have one bid, or must we decline the project until two bids are submitted?
Date Published: May 2015
Grantees and subrecipients that are governmental entities are required to use their own procurement procedures which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal law and the standards identified in 2 CFR 200.320. When procuring for a housing rehabilitation contractor, the applicable procurement methods would include small purchase (currently up to the simplified acquisition threshold limit of$100,000) or formal sealed bids. If small purchase procedures are used, price or rate quotations shall be obtained from an adequate number of qualified sources. Generally, obtaining three (3) bids is regarded as a minimum standard for small purchase procurements. In order for the formal sealed bid procedure to be feasible, two (2) or more responsible bidders must be willing and able to compete effectively for the business (i.e. two bids must be received).
If a private individual (e.g. the housing rehabilitation beneficiary household) receives a grant or loan from a grantee or subrecipient, the federal procurement requirements do not apply to that private individual. However, grantees are highly encouraged to implement procedures to ensure cost reasonableness, such as preparing an internal cost estimate along with the work write-up and requiring that the beneficiary household obtain a minimum number of bids. The contract award should be made to a contractor whose bid is determined to be a reasonable bid in comparison to the internal cost estimate and other bids.
In the event that procurement efforts do not result in an acceptable number of bids, we recommend that you review your contractor outreach efforts and consult with your local CPD Field Office representative to determine the adequacy of your particular procurement.