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“The biggest mistake I’ve seen across the country in CDBG-DR programs is not following proper procurement,” says IBTS Corporate Disaster Recovery Executive Mike Spletto. “I’ve seen local governments have the entire procurement become null and void for not following federal competitive bid requirements.”

Because the CDBG-DR program is federally funded, grantees must follow federal procurement policies when using program funds to purchase goods and services for disaster recovery. IBTS CDBG-DR program management experts highlight common points of confusion and offer a primer for stakeholders new to the federal procurement rules and regulations.

Before beginning the procurement process, you must have a written procurement policy.

• The first step is to implement a written policy that is compliant with all local, state and federal procurement requirements. Federal procurement requirements are outlined in 2 CFR part 200.
• Consider hiring a consultant to review your procurement policy for compliance with federal rules. If your policies are noncompliant, you may have to repay your CDBG-DR funds.
• IBTS recommends third-party Quality Assurance/Quality Control oversight throughout the procurement process to ensure compliance.

CDBG-DR grantees are typically required to get at least three quotes for each procurement.

• When selecting a contractor under federal procurement rules, you must prove the reasonableness of the proposed cost. This is defined by HUD as “what a prudent businessperson would pay.” Having multiple bids helps you establish your cost-reasonableness metrics.
• If you are unable to get three quotes you still must prove that you tried by providing detailed records of procurement activities.

Procurements must be awarded on a competitive bid basis.

• This doesn’t mean the grantee has to take the lowest price, but you must issue an official solicitation through a Request for Proposals that takes qualifications and cost into account and gives every contractor an equal opportunity to bid.
• In post-disaster chaos, a common mistake made by grantees unfamiliar with federal procurement rules is hiring a contractor they have a pre-existing relationship with instead of putting a solicitation out and going through the procurement process.

Contractors must be registered in the System for Award Management (SAM). 

• Any contractor procured to work on a federally funded project, including activities funded by the CDBG-DR program, are required to be registered in SAM.
• Check on Sam.gov to make sure the contractors you procure are registered, or ensure they register before contracting.

Be sure to check the federal debarment list before awarding any contracts.

• The U.S. Department of Labor maintains a database of contractors prohibited from receiving federally funded contracts due to violations on previous federal contracts. You will be found non-compliant if you select a contractor that is on the federal debarment list.
• You can check contractors’ status using Sam.gov’s search records portal.

If your procurement policies are found noncompliant, common actions taken by the Office of Inspector General include:

• Documentation
• Repayment
• Development of a procurement policy and procedures
• Training

For more information, see HUD’s CDBG-DR and Procurement: A Guide to Recovery and IBTS’s presentation on CDBG-DR procurement.