Full and Open Competition
Third Party Procurement
Frequently Asked Questions
Q = Question; A = Answer
Q. If proposals have been received and ranked according to how they performed in regard to the posted criteria, can the agency just negotiate terms with the highest ranked proposer, or do we have to negotiate with (a) all the proposers, or (b) just the proposers in the competitive range?
A. If the agency is prepared to make its selection decision on the basis of proposals as submitted without discussion with any of the offerors, then that decision must be reduced to writing and approved by the source selection official. The selection decision memorandum should set forth the areas that need to be negotiated. Once the selection was officially made you could then conduct negotiations with the selected firm. If the agency is not prepared to officially select the top ranked firm now, then discussions/negotiations should be conducted with all firms in the competitive range. The competitive range decision should be reduced to writing and approved by the selection official. All firms having a reasonable chance of award should be included in the competitive range. Based on negotiations and the best and final offers submitted, the agency could then make its selection decision. (Reviewed: May 2010)
Q. Can an agency utilize a Job Order Contract (JOC) with more than one contractor? What method of job allocation will meet FTA requirements?
We are interested in utilizing a JOC for maintenance as well as small new project delivery along the light rail system. The system is about 20 miles long. The size of the possible delivery area is large and I believe it may not be possible for one contractor to meet our requirements.
A. The normal practice would be to obtain price competition in the initial contract by comparing complete prices for representative work likely to be ordered under the contract (e.g., install a square of wallboard, finished and suitable for painting = $xxx.xx) and issue a single contract. Then, prices for actual jobs are compiled from the menu. Each line item is self-contained (i.e., all-inclusive of materials, labor, supervision, overhead, etc.) so there would be nothing left to negotiate. If you anticipate work beyond the capabilities of the first contractor, you should explain in the solicitation how you will allocate work (e.g., the winner gets all orders up to $YYYY/month, then number 2 gets the next $YYYY, if any). (Revised: May 2010)
Q. Since we have standardized/sole sourced HP product for our IT needs, can we just buy directly from HP? Usually we have the user complete a sole source justification to acknowledge the need for a single brand and then we take the procurement out for bid. However, we have recently discovered that HP will negotiate a great deal if we buy direct from them vs. bidding out. That not only saves us a lot of capital funding, but also reduces the amount of work in the acquisition process. Is this allowed?
A. The limitation of your procurement to a name brand is, as you recognize, a restriction on competition, but this brand name restriction would still allow competitive bids from HP and HP retailers. It is quite possible that high volume retailers would under-price the manufacturer. The fact is that limited competition on the brand name does not excuse the requirement for competition on other aspects of the procurement. (Reviewed: May 2010)
Q. We issued an RFP for an on-board surveillance system. In the RFP we did not require prospective vendors to provide us with a test-installation of their system before award. After the RFP has been issued, we received a proposal from our Governmental insurance authority to test a system that the insurance providers seem to want their transit members to have. The Authority is willing to pay for 50% of this procurement, if the agency tests this system for 90 days and then purchases it.
It seems that this places the other firms at a competitive disadvantage, if we test only the system suggested by the Authority. Is there a way to still test this one system, and still stay in compliance, or we will have to open ourselves up to the tests of multiple systems to be fair to other potential vendors?
A. All evaluation factors should be identified in your RFP, along with their relative importance. This would require you to identify any testing you intended to do on the products offered and describe how the test results would be used in the selection process. If there is to be a minimum "pass-fail" performance requirement that the products must meet, that too must be identified in the RFP. (Revised: May 2010)
Q. We are procuring our first construction contract. We are requiring contractors to carry $10m commercial general liability as well as $10m auto liability. A contractor contacted us claiming that our insurance requirements are unreasonable and that we are preventing smaller contractors from bidding the job. Are we in any way potentially in breach of the full and open competition requirement?
A. We lack sufficient data to tell you if your insurance requirements of $10M are too high. If they are in fact excessive, you will be paying more for this job since the cost of insurance will be passed on to you in higher bids prices and you may very well preclude some contractors from bidding, thus reducing competition. We would advise you to talk to other agencies to see what they have required, and to talk to some prospective bidders to get their experiences, and perhaps contact the bidders on your mailing list to see if the insurance requirements were a problem in bidding. If you find there is in fact a problem, you could amend the IFB. In the final analysis, it is your call as to what is needed to protect your agency, and FTA would not normally question your decision unless a prospective bidder brought evidence that the insurance requirements were unrealistically high and this precluded firms from bidding. (Revised: May 2010)
Q. Would the FTA requirement for "full and open competition" be satisfied by the following procurement method? An open solicitation is issued asking for qualification-based proposals from prospective Construction Managers (CMs). The CM is then selected from these offerors based on qualifications. The CM then solicits bids from at least three subcontractors for each job to be done. The sub with the lowest bid is awarded a subcontract by the CM. The CM's contract price is adjusted to reflect the subcontract cost, and a management fee of 2.5% - 4% is negotiated with the CM. The CM is at risk under its fixed price prime contract with the agency.
A. Your procurement procedure for selecting and administering the construction Manager at risk contract does not appear to be a problem with respect to full and open competition, assuming price is a factor in the selection process. The prime contractor is selected as a result of a full and open competition. The prime contractor's subcontract process is not subject to the requirements of FTA Circular 4220.1F, only to the requirements of the statutory and regulatory clauses that are included in the prime's contract with the grantee. The prime contractor may select its subcontractors using competitive procedures that limit the number of bidders to a number that will ensure a fair and reasonable price and will also ensure that the prime is satisfied with the capabilities of the bidders. Since the prime is ultimately responsible for the work product of the selected subcontractor, it is reasonable that the firms allowed to bid as subcontractors be those that are most fully qualified so as to protect the interests of the prime contractor who is assuming a fixed price risk under his prime contract. (Revised: May 2010)
Q. When using FTA Section 5307 funds for research and development purposes to acquire an Integrated Land Use and Transportation Model that the acquisition be conducted competitively? The model would be for transit and highway purposes.
A. Generally, section 5307 funds are subject to 49 U.S.C. 5307(d)(1)(E), which requires procurements funded with section 5307 money to be competitively procured. While a university may compete for a bid, the statute does not provide universities with an exclusion from this requirement. (Revised: May 2010)
Q. State law allows us to use a small works roster process for public work (construction) bids up to $200,000. It requires us to advertise the roster at least once a year, to solicit quotes from at least 5 firms on the roster, to rotate the roster fairly and equitably, and to allow firms to be added to the roster at any time. Since each individual solicitation is not advertised, only the roster is advertised, does this meet the FTA requirement of publicly advertising solicitations over $100,000? By using the small work roster process, we are able in certain cases to waive certain state requirements such as retainage, which increases full and open competition by small businesses.
A. The FTA Procurement Circular 4220.1F that grantees may use their own procurement procedures that reflect state or local laws but such procedures must conform to the requirements of the FTA Circular, which in turn reflects the requirements of the Common Grant Rule (49 CFR Part 18) governing grantee procurements.
The Circular requires "full and open competition" for all procurements; however, the Circular makes an exception for procurements equal to or less than the Federal small purchase threshold, currently set at $100,000. The exception for small purchases pertains to the extent to which bids or proposals are solicited. For small purchases, prices may be solicited "from an adequate number of qualified sources." The requirement for an "adequate" number differs from the full and open competition standard that requires the grantee to publicly advertise the procurement and allow bids or proposals from all interested parties, not just from an "adequate" number. For example, the grantee could not predetermine how many bids or proposals would be solicited when the procurement exceeded $100,000.
Based on the Circular requirements as noted above, your agency could not use the State roster procedures for projects above $100,000. For projects above $100,000 you would be required to advertise the project and accept bids from however many firms decide to bid.
However, that if the State awarded GSA-type contracts with pre-established prices and these State contracts were awarded on the basis of full and open competition, then the FTA requirement for full and open competition would have been met and your agency could then award from the State contract without advertising and accepting bids from all interested sources. (Revised: May 2010)
Q. The South Carolina Procurement Code in Section 11-35-3230 allows for direct negotiation and no RFQ process in securing an engineering service if the service will cost less than $25,000. Will the FTA allow this?
A. The FTA Circular 4220.1F allows for the solicitation of proposals or bids from "an adequate number of qualified sources" when the value of the procurement falls within the Federal small purchase dollar threshold, currently fixed at $100,000 or less.
The FTA Circular would not allow a grantee to select only one source for negotiations of a contract even though the SC Code might allow it. Micropurchases ($3000 or less) are an exception. (Revised: May 2010)
Q. Our agency has 38 buses with frames that are rusting to the point where they need to be repaired or the units will have to come out of service. We have three estimates from local companies that can do the repairs. Due to the safety issues, can we use all three companies to do the repairs? Each repair estimate is $5,500.
A. Your agency has about $209,000 in repairs that need to be made. It appears that you are asking whether FTA would object to the agency awarding multiple contracts or whether FTA would insist on a single vendor performing all repairs. FTA would not object to multiple awards if the agency concludes that one vendor cannot perform all of the needed repairs in a timely manner. (Reviewed: May 2010)
Q. We are checking to make sure we meet all the FY2010 certifications and Assurances. One of the requirements includes the following: (4) In compliance with 49 U.S.C. 5307(d)(1)(E), the Applicant, in carrying out a procurement financed with Federal assistance authorized under 49 U.S.C. 5317: (1) will use competitive procurement (as defined or approved by FTA). I would like to know the definition of competitive procurement as defined by the FTA.
A. The FTA Circular 4220.1F, Chapter VI, requires, as a general rule, "full and open competition" when awarding contracts. The Circular states, "compliance with the solicitation requirements described in this Chapter will fulfill FTA requirements for "full and open competition." (Ch. VI,1.a.). There is no "definition" per se that we can offer you. You will have to examine the various solicitation requirements in this Chapter to see how FTA determines adequate competition.
Also, please look to Chapter VI, Paragraph 3.b.(2)(a), Competition: The recipient must obtain price or rate quotations from an adequate number of qualified sources. Same chapter, paragraph (c)(1)(b), Adequate Sources: Two or more responsible bidders are willing and able to compete effectively for the business. (Posted: October, 2010)
Q. Would an auditor rotation policy violate the requirements of 4220.1F to "..use third party procurement procedures that provide full and open competition"? The incumbent auditing firm would not be allowed to bid if they had provided 10 years of continued service, but they would otherwise be qualified. Has this been addressed at the FTA level before?
Background Information: We are considering creating an auditor rotation policy that would not allow an auditing firm to provide services longer than ten years (two five year contracts). The accounting industry is mixed on whether an auditor policy increases or decreases audit quality.
A. If your agency believes that rotation of auditors should be the policy based on audit quality considerations, FTA would have no problem with that decision as long as the contract was advertised and open to all qualified firms except for the incumbent, also was advertised and open to all qualified firms and stipulate that the maximum length of contract award is 10 years (base five year contract with one option period of five years). (Posted: December, 2011)
Q. We are currently putting together a project to replace our existing card access controls and associated door hardware throughout our owned buildings. We will also be adding to the scope of work to add on access control to several existing doors that currently do not have access control. The additional door access control would include all of the necessary wiring, conduit, hardware, and access controls to make them fully functional.
The other project that we are also working on is to replace our existing public address system throughout our owned buildings. We will also be adding to the scope of work to add additional speakers into areas that currently do not have them. The additional speakers would include all of the necessary wiring, conduit, hardware, and public address system controls to make them fully functional. We have hired an architectural and engineering firm to do the design work and produce the necessary drawings and specifications. Questions: Are these tasks above considered to be construction?
Would it be allowable to bundle these two tasks into one IFB/RFP?
A. You have the discretion to use one RFP for both tasks but we would question the wisdom of doing so based on the issue of maximizing or diminishing competition for the contracts. The question you need to address is: will combining the tasks in one solicitation result in more competition or less? Will some contractors be precluded from bidding, and thus diminish competition, because they cannot do both tasks?
As to whether this work is considered construction, we would suggest you contact one of the California Offices of the Department of Labor, Wage and Hour Division:
(Posted: June, 2012)
Q. We currently have a solicitation on the street for farebox equipment. One of the requirements of the specification is that our Transit Operation accepts cash payment and the farebox must have the ability to provide change for fare overpayment in the form of a stored value card that can be used for subsequent fare overpayment. We originally denied a request for an approved equal for a system that would provide a thermally printed change receipt which can be traded in at any agency specified location; however, it cannot be used on the bus as fare for a future ride. The justification for denying this request is that the County does not have a sufficient infrastructure in place (public locations that sell tickets) to set up an exchange voucher system. The County would like our customers to have a single point of transaction. A letter from a potential bidder has been received after the denial of the exchange voucher system, stating we are limiting the solicitation to a single, sole-sourced bid. In this case, our riders currently can pay by cash and receive change. The County is allowing the use of stored value card, however we do not have locations throughout our county that sell tickets and therefore the Thermal Receipt Voucher process proposed by one bidder would make it more difficult on our riders to get change. How do we balance the needs or our riders and transit operations, with the need for a fair and open bidding process?
A. We understand that you have three prospective bidders for this procurement of new fare box equipment for your buses. One of the prospective bidders does not have the technology to provide a stored value card that the rider could use again on future rides by simply inserting the stored value card in the fare box. Lacking a stored value card, the riders would be forced to take a receipt for their overpayment and turn that receipt in at a location that sells tickets, which locations are not convenient to the riding public. You note also that the stored value technology is not new; it is in use in many other agencies throughout the country. We believe you are not unduly restricting competition by insisting on a stored value system as a convenience for your riders. We also agree with you that an exact fare system would not work since you have 23 different fares depending on the length of the ride, and an exact fare system would not be feasible for new riders entering the system without knowledge of what the fare might be for their ride. In conclusion, we believe you have strong and compelling reasons for insisting on a stored value fare card technology in this procurement to upgrade your fare box system equipment with the best technology as a convenience to your riders and operators. (Posted: January, 2013)
Q. We have a State of Good Repair grant that will fund half of our construction project. We are going to finance the other half. Do we need to do an RFP to obtain the bank or can we use the bank of our choice?
A. We assume that the FTA grant will fund the financing cost of the borrowed funds for the construction project. If that is the case then the bank must be selected through a competitive procurement with full and open competition. If the financing costs were to be funded entirely with local funds (no FTA participation), then you would not have to comply with FTA Circular 4220.1F and you could follow your local/state regulations for the procurement process. (Posted: December, 2014)
Q. What are the procurement rules for a company to come in to demonstrate their cameras for inside the buses? It’s a 180 demo with the option to purchase.
A. Assuming that the equipment demonstration would play an important part in your decision as to what vendor's equipment you will eventually select, the principle of full and open competition would require your agency to allow all prospective vendors to demonstrate their equipment. You will of course be advertising the procurement with appropriate performance specifications that prospective vendors must meet. If you wish to require vendors to demonstrate that their equipment meets your performance specifications as a precondition for submitting bids or otherwise qualifying for the award, you may do so. You must exercise care not to structure your specifications around any particular vendor's equipment. We would suggest you conduct an industry survey to determine what the marketplace has to offer and then develop a performance specification that would permit full and open competition among the various suppliers. Your local procurement rules may allow you to use a "best value" evaluation/selection process that would tradeoff price and technical performance in such a way as to allow selection on the basis of the best overall value to the agency, considering price, technical equipment performance, warranties, etc. (Posted: January, 2015)
Q. Would the FTA requirement for "full and open competition" be satisfied by the following procurement method? An open solicitation is issued to all prospective contractors asking for pricing (hourly rate and percent off materials) in reference to their qualifications in certain trades. Contracts are awarded to all firms that meet the qualifications. As work is defined during the year, the municipality (in its sole reasonable judgment, in the municipality’s best interest) selects which awarded on-call contractor(s) will be requested to submit a cost proposal for the work. The work is then issued on a firm fixed price basis to the contractor that submitted the lowest total cost.
It is understood that applicable Federally Required Contract Clauses shall be included in the work specifications. However, must the initial open solicitation and resulting contracts cite Federally Required Contract Clauses that may apply or will a chart on the applicability of the Clauses suffice?
A. We understand that the work you are procuring represents small construction projects that do not exceed $35,000 in value. The on-call selection procedure you describe would not satisfy the FTA requirement for “adequate” competition, which is the standard that FTA uses for simplified acquisitions (those under $150,000) such as yours. Your method of selecting the actual contractor to do the work (once it is defined) is essentially a sole source decision and is not competitive. Your initial selection process only determines the prospective qualified sources that would be eligible to do the work but it does not determine the most qualified/most economical source. Once the work is defined, you will need to solicit fixed price proposals from the qualified sources you have identified in step one in order to determine which firm is actually the best to do the work. Since the projects are under the simplified acquisition threshold of $150,000 you do not need to advertise the procurements. You do need to ensure you obtain adequate competition. This will require at least two price quotes, but more may be preferable. FTA policies call for you to ensure that there is adequate competition for these small purchases, and price must be a factor in the award. Qualifications based awards are only permitted for A&E contracts.
With respect to contract clauses, since the tasks to be awarded under these on-call contracts are for smaller construction jobs, not exceeding $35,000, the clauses required will be those shown in the FTA Circular 4220.1F, Appendix D, for construction contracts under $100,000. The Circular is available online http://www.fta.dot.gov/legislation_law/12349_8641.html. (Posted: November, 2015)