[Federal Register Volume 60, Number 171 (Tuesday, September 5, 1995)]
[Rules and Regulations]
[Pages 46152-46159]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-21767]




[[Page 46151]]

_______________________________________________________________________

Part II





Department of Housing and Urban Development





_______________________________________________________________________



Office of the Assistant Secretary for Administration



_______________________________________________________________________



48 CFR Part 2401 et al.



HUD Acquisition Regulations: Miscellaneous Amendments and Competition 
Advocate Designation; Interim Rule and Notice

  Federal Register / Vol. 60, No. 171 / Tuesday, September 5, 1995 / 
Rules and Regulations   

[[Page 46152]]


DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Administration

48 CFR Parts 2401, 2402, 2404, 2405, 2406, 2413, 2415, 2416, 2419, 
2426, 2428, 2429, 2432, 2436, 2437, 2452 and 2453

[Docket No. FR-3887-I-01]
RIN 2535-AA23


HUD Acquisition Regulation; Field Reorganization, Streamlining, 
and Simplification

AGENCY: Office of the Assistant Secretary for Administration, HUD.

ACTION: Interim rule and request for comments.

-----------------------------------------------------------------------

SUMMARY: This interim rule makes changes to the HUD Acquisition 
Regulation (HUDAR) required to implement: the Department's Field 
reorganization, particularly the establishment of the Administrative 
Service Centers; the Federal Acquisition Streamlining Act of 1994 
(FASA); and Departmental efforts to streamline and simplify the 
procurement process.

DATES: Effective Date: October 5, 1995.
    Comment due date: Comments on this interim rule must be submitted 
on or before November 6, 1995.

addresses: Send written comments to Rules Docket Clerk, Room 10276, 
U.S. Department of Housing and Urban Development, 451 Seventh St., SW, 
Washington, DC 20410.

FOR FURTHER INFORMATION CONTACT: Edward L. Girovasi, Jr., Director, 
Policy and Evaluation Division, Office of Procurement and Contracts, 
Room 5262, 451 Seventh Street, SW., Washington, DC 20410-3000 (voice 
(202) 708-0294, TDD (202) 708-1112). (These are not toll-free numbers.)

SUPPLEMENTARY INFORMATION:

Background

    The uniform regulation for the procurement of supplies and services 
by Federal departments and agencies, the Federal Acquisition Regulation 
(FAR), was promulgated on September 19, 1983 (48 FR 42102). The FAR is 
codified in title 48, chapter 1, of the Code of Federal Regulations. 
HUD promulgated its regulation to implement the FAR on March 1, 1984 
(49 FR 7696).
    The HUDAR (title 48, chapter 24 of the Code of Federal Regulations) 
is prescribed by the Assistant Secretary for Administration under 
section 7(d) of the Department of HUD Act (42 U.S.C. 3535(d)); section 
205(c) of the Federal Property and Administrative Services Act of 1949 
(40 U.S.C. 486(c)); the Secretary's delegation effective October 9, 
1985 (50 FR 42097); and the general authorization in FAR 1.301.
    The purpose of this interim rule is to amend the HUDAR to update 
existing coverage with respect to the Department's structure and 
organizational responsibilities; to implement FASA (Pub. L. 103-355, 
approved October 13, 1994); and to streamline Departmental procurement 
practices.
    The heading of HUDAR subpart 2401.6 is revised to read ``Career 
Development, Contracting Authority, and Responsibilities''.
    HUDAR 2401.601-73 is retitled ``Administrative Service Centers'' 
and is revised to reflect HUD's current field structure and to 
eliminate content which duplicates published delegations of procurement 
authority.
    HUDAR 2401.602-3 is revised to conform to the structure of FAR 
1.602-3 and provide greater discretion to the HCA in handling 
ratifications.
     HUDAR 2402.101 is revised to add definitions for the ``accounting 
office'', and the ``best value'' and ``lowest-priced technically 
acceptable proposal'' approaches to source selection; to correct the 
HCA designation for field procurements; to provide a more generic 
definition for ``Legal Counsel''; to add the ``General Counsel'' to the 
list of ``Primary Organization Heads''; and to clarify the definition 
of ``Source Selection Official''.
    The heading of HUDAR Subpart 2404.8 is revised to read ``Government 
Contract Files''.
    HUDAR 2404.805-1 is renumbered and retitled to conform to recent 
FAR changes, and the content is revised to grant the contracting 
officer greater discretion in managing the disposition of unsuccessful 
proposals.
    HUDAR subpart 2405.3 and section 2405.301 are removed in their 
entirety. HUD's practices in synopsizing contract awards will conform 
to the FAR.
    HUDAR 2406.304-70 is revised to establish an approval official 
(Director, Office of Procurement and Contracts) for field contracts at 
a level consistent with that required by FAR 6.304.
    HUDAR 2406.304-71 is removed in its entirety. HUD's practices in 
reviewing and approving justifications for other than full and open 
competition will conform to the FAR.
    HUDAR 2406.501 is revised to state that the Senior Procurement 
Executive will designate the Department's Competition Advocate by 
Federal Register notice and to authorize each HCA to appoint 
contracting activity-level competition advocates.
    HUDAR Part 2413 is retitled to conform to the FAR.
    HUDAR 2413.107 is redesignated as 2413.106-2 and retitled to 
conform to the FAR. The regulation text is unchanged.
    HUDAR 2413.403 is redesignated as 2413.402 to conform to the FAR, 
and revised to remove an obsolete directive and add correct information 
regarding the operation of imprest funds.
    HUDAR 2413.404 is redesignated as 2413.403 to conform to the FAR 
and the text is revised to avoid duplication of imprest fund 
transaction limits stated in the FAR.
    HUDAR 2413.505-2 is redesignated as 2413.505-1(b) and retitled to 
conform to the FAR. Its text is revised to authorize the use of Form 
HUD-2542, Purchase Order and Payment Authorization, for any small 
purchase charged to the FHA Fund, and to remove information that is 
internal in nature.
    HUDAR subpart 2413.6 and section 2413.601 are added to reference 
HUD's internal directive governing use of the Government-wide 
commercial credit card to make micro-purchases.
    HUDAR 2414.406-4 is revised to clarify that the concurrence of 
counsel should be obtained at headquarters or the field, depending on 
the location of the contracting activity.
    HUDAR 2415.407 is revised to separate the basic provision dealing 
with proposal content from those cases requiring cost and pricing data. 
When the latter are required, new Alternate I is prescribed for use. In 
addition, contracting officers are granted the latitude to adapt 
Alternate I or develop additional text to deal with situations when 
partial cost and pricing data may be needed as provided in FAR 15.804-
6(a)(2).
    HUDAR 2415.408 is removed because adequate coverage on issuing 
solicitations is contained in the FAR.
    HUDAR 2415.411 and 2415.411-70 are removed in their entirety. The 
prescribed use of the Form HUD-4056, Abstract of Proposals, is an 
internal agency matter.
    HUDAR subpart 2415.6 contains numerous revisions to simplify HUD's 
source selection practices. While each section change is explained in 
turn below, the general thrust of these revisions is to move to one 
procedure for the evaluation of proposals, and to clarify distinctions 
in procedures when using the ``lowest-priced technically acceptable 
proposal'' or ``best value'' approach to source selection.
    HUDAR 2415.604 is revised to establish a single procedure for the 

[[Page 46153]]
    evaluation of proposals and to distinguish responsibility for the 
source selection decision under the two possible source selection 
approaches-- ``best value'' or ``lowest-priced technically acceptable 
proposal''.
    HUDAR 2415.605 is revised to require that each solicitation 
identify the source selection approach to be used in evaluating 
proposals, and to provide a distinction between the types of evaluation 
factors available for use.
    HUDAR 2415.608 is revised to clarify procedural differences in the 
evaluation of proposals under the two possible source selection 
approaches, and to eliminate information adequately covered in the FAR.
    HUDAR 2415.609 is removed. The content of this section was removed 
in an earlier HUDAR amendment; the section title was overlooked.
    HUDAR 2415.611 is added to clarify requirements for documentation 
of the source selection decision.
    HUDAR 2415.612 and 2415.612-70 are removed in their entirety. In 
order to streamline and expedite the procurement process, HUD will not 
use formal source selection procedures.
    HUDAR 2415.613-70 is revised to clarify that the alternative 
procedures authorized by this section use the best value approach to 
source selection. That same section and 2415.613-72 are both revised to 
eliminate references to Source Evaluation Boards, a formal procedure 
that will no longer be used.
    HUDAR Subpart 2416.3, Cost-Reimbursement Contracts, and sections 
2416.301 and 2416.301-3 are removed in their entirety. Recent changes 
to the FAR to implement FASA eliminated the requirement for 
determinations and findings to support the selection of contract type.
    HUDAR subpart 2426.1 is redesignated as subpart 2426.70 to conform 
to the FAR. Accordingly, HUDAR 2426.101, 2426.102, and 2426.103 are 
redesignated as 2426.701, 2426.702, and 2426.703 (the regulation text 
of the latter two sections is unchanged). HUDAR 2426.701 is revised to 
delete the list of ethnic groups designated as ``Minority Business 
Enterprises'', and instead rely on definitions established by the Small 
Business Administration pursuant to Section 8(d) of the Small Business 
Act.
    HUDAR subpart 2426.2 and section 2426.201 are removed.
    HUDAR Subpart 2428.2, Sureties, the heading of section 2428.204, 
and section 2428.204-70 are removed in their entirety. FAR 28.203-2 
contains adequate information regarding the use of irrevocable letters 
of credit.
    HUDAR 2429.101 is revised to conform the section title to the FAR 
and clarify that coordination with legal counsel may be at headquarters 
or in the field, depending on the location of the contracting activity.
    HUDAR 2432.402, 2432.906 and 2432.908 are revised to correct 
references to HUD field components consistent with the Department's 
reorganization.
    HUDAR 2436.602-2 and 2436.602-4 are revised to: authorize the 
appointment of non-voting advisors to architect-engineer evaluation 
boards; change appointment and selection authorities consistent with 
the Department's field reorganization; correct references to HUD's 
Standards of Conduct; and, clarify that referral of matters to legal 
counsel may occur at headquarters or in the field, as appropriate.
    HUDAR 2437.205 is revised to remove the requirement for higher-
level review of contracts for advisory and assistance services 
contracts consistent with recent changes to the FAR. In addition, the 
use of Form HUD-24003, GTR Performance Assessment (Final) is prescribed 
to document the utility of products or services delivered by the 
contractor, as required by FAR 37.205.
    HUDAR 2452.215-70 is revised to separate the requirement for cost 
and pricing data from the basic provision concerning proposal content. 
A new Alternate I has been added to deal with situations when cost and 
pricing data are required, in conformance with recent FAR changes 
increasing the threshold for submission of cost and pricing data to 
$500,000.
    HUDAR 2452.219-70 is revised to eliminate repetition and clarify 
the content of Alternate I.
    HUDAR 2452.226-70 is revised to make a conforming change in a 
reference from 2426.103 to 2426.703, and to delete ``Hasidic Jewish 
Americans'' from the ethnic groups listed as ``Minority Business 
Enterprises''. Their inclusion was based on an improper application of 
the Minority Business Development Agency's regulations at 15 CFR 1400.1 
which defines groups eligible for MBDA assistance. Those regulations do 
not establish eligibility for other Federal or Federally-funded 
programs.
    HUDAR 2452.232-70 and 2452.232-71 are revised to allow discretion 
in their application and to correct the reference to field components 
in Alternate I to both clauses.
    HUDAR 2453.213-71 is removed because Form HUD-24001, Order for 
Supplies or Services, is no longer in use.
    HUDAR 2453.213-72 is renumbered as 2453.213-71 and is revised to 
authorize the use of Form HUD-2542, Purchase Order and Payment 
Authorization, for any small purchase charged to the FHA Fund.
    HUDAR 2453.237-70 is added to define the use of Form HUD-24002, GTR 
Performance Assessment (Final), to document contractor performance and 
the utility of products or services delivered.

Other Matters

Paperwork Reduction Act

    The Paperwork Reduction Act of 1980 (44 U.S.C. 3501-3520) requires 
that Federal agencies obtain approval from the Office of Management and 
Budget (OMB) before collecting information from 10 or more persons. 
There are no new information collection requirements contained in these 
amendments to the HUDAR. The OMB Approval Number is 2535-0091.

Justification for Interim Rulemaking

    The Department has determined that this rule should be adopted 
without the delay occasioned by requiring prior notice and comment 
because the majority of the changes either: implement FAR revisions 
already in effect that must be followed by HUD contracting personnel 
immediately; or, simply correct references to HUD organizational 
components consistent with the Department's field reorganization. Since 
this interim rule only makes conforming and clarifying changes to 
existing provisions, prior notice and comment are unnecessary under 24 
CFR Part 10.
Environmental Impact

    In accordance with 40 CFR 1508.4 of the regulations of the Council 
on Environmental Quality and 24 CFR 50.20(k) of the HUD regulations, 
the policies and procedures contained in this rule relate only to the 
performance of accounting, auditing and fiscal functions and, 
therefore, are categorically excluded from the requirements of the 
National Environmental Policy Act.

Regulatory Flexibility Act

    As required by section 605(b) of the Regulatory Flexibility Act (5 
U.S.C. 601), the undersigned hereby certifies that this rule does not 
have a significant economic impact on a substantial number of small 
entities because it merely makes amendments to the Department's 
acquisition regulations that: simplify HUD's procurement process, 
revise internal HUD component references, and implement FAR 

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revisions without adding additional requirements.

Executive Order 12612, Federalism

    The General Counsel, as the Designated Official under Section 6(a) 
of Executive Order 12612, Federalism, has determined that the policies 
contained in this rule will not have substantial direct effects on 
States or their political subdivisions, or the relationship between the 
Federal government and the States, or on the distribution of power and 
responsibilities among the various levels of government. The rule makes 
technical revisions and corrections to the agency's regulations. As a 
result, the rule is not subject to review under the Order.

Executive Order 12606, The Family

    The General Counsel, as the Designated Official under Executive 
Order 12606, The Family, has determined that this rule will not have 
potential for significant impact on family formation, maintenance, and 
general well-being, and, thus, is not subject to review under the 
Order. The rule involves Departmental procurement procedures only.

Semiannual Agenda of Regulations

    This rule was not listed in the Department's Semiannual Agenda of 
Regulations published on May 8, 1995 (60 FR 23368,) under Executive 
Order 12866 and the Regulatory Flexibility Act.

List of Subjects in 48 CFR Parts 2401, 2402, 2404, 2405, 2406, 
2413, 2415, 2416, 2419, 2426, 2428, 2429, 2432, 2436, 2437, 2452 
and 2453

    Government procurement, HUD acquisition regulations.

    Accordingly, title 48, Chapter 24 of the Code of Federal 
Regulations, is amended as follows:

PART 2401--FEDERAL ACQUISITION REGULATIONS SYSTEM

    1. The authority citation for part 2401 continues to read as 
follows:

    Authority: 40 U.S.C. 486(c); 42 U.S.C. 3535(d).

    2. The heading of subpart 2401.6 is revised to read as follows:

Subpart 2401.6--Career Development, Contracting Authority, and 
Responsibilities

    3. Section 2401.601-73 is revised to read as follows:


2401.601-73  Administrative Service Centers.

    Procurement of supplies and services for HUD field components is 
accomplished at the three Administrative Service Centers, each of which 
has a Contracting Division. The ASC Contracting Division Director may 
redelegate contracting authority to qualified personnel within their 
service area jurisdiction, consistent with the Department's published 
delegations of procurement authority and 2401.603.
    4. Section 2401.602-3 is revised to read as follows:


2401.602-3  Ratification of unauthorized commitments.

    (b)(1) Policy. A request for ratification shall be sent to the 
Contracting Officer through the Head of the Contracting Activity (HCA). 
The request will include an explanation as to the need for the service, 
the reason why normal procurement procedures were not followed, to what 
extent price competition was received or the price otherwise justified, 
and, corrective management actions to avoid ratifications in the 
future. If the justification is adequate, the ratification will be 
signed by the Contracting Officer and forwarded to the HCA or designee 
for approval.
    (b)(3) The HCA may delegate authority to approve ratifications 
below the simplified acquisition threshold to:
    (i) Contracting division directors (Headquarters); or,
    (ii) Contracting branch chiefs (Field).
    (c)(5) Legal concurrence may be requested if there is a legal issue 
involved, e.g. the propriety of the funding source, appropriateness of 
the expense, etc.

PART 2402--DEFINITIONS OF WORDS AND TERMS

    5. The authority citation for part 2402 continues to read as 
follows:

    Authority: 40 U.S.C. 486(c); 42 U.S.C. 3535(d).

    6. In Sec. 2402.101, the definitions of Head of Contracting 
Activity, Primary Organization Heads, and Source Selection Official are 
revised, and the definitions of Accounting Office, Best Value, Legal 
Counsel, and Lowest-Priced Technically Acceptable Proposal are added in 
alphabetical order, to read as follows:


2402.101  Definitions.

    Accounting Office means the Office of Finance and Accounting in 
headquarters or the Field Accounting Divisions in the field.
    Best Value is an approach to source selection that considers the 
appropriate balance of technical merit, management capability, and 
cost/price factors in deciding which proposal offers the overall ``best 
value'' to the Government. A best value procurement permits the 
government to award a contract to an offeror with a higher price in 
order to obtain a better technical product or service with a lower risk 
that performance will be unsuccessful. The selection decision may be 
based on a determination of whether to tradeoff paying a higher price 
to obtain the added value of a particular proposal.
* * * * *
    Head of Contracting Activity (HCA) is defined in accordance with 
the FAR. The following HUD officials are designated HCAs:
    (1) Director, Office of Procurement and Contracts, for HUD 
Headquarters procurement;
    (2) The Directors, Administrative Service Center Contracting 
Divisions for field procurement;
    (3) The President, Government National Mortgage Association (GNMA), 
for procurement transactions that are conducted by GNMA in accordance 
with 2401.601-72(c).
    Legal Counsel means the Office of General Counsel in Headquarters, 
or the cognizant Assistant General Counsel in the field.
    Lowest-Priced Technically Acceptable Proposal is an approach to 
source selection under which all evaluation factors, except price, are 
evaluated on a ``Pass-Fail'' basis. It is used when price will be the 
deciding factor once the technical acceptability of proposals has been 
determined.
    Primary Organization Heads are those officials of the Department 
who are responsible for the major organizational components of HUD and 
who report directly to the Secretary or Deputy Secretary. The Primary 
Organization Heads of HUD include: the Assistant Secretaries, the 
Inspector General, and the General Counsel.
* * * * *
    Source Selection Official means the head of the office initiating 
and providing funding for the procurement, or his/her designee. This 
role may also be delegated to the contracting officer.

PART 2404--ADMINISTRATIVE MATTERS

    7. The authority citation for part 2404 is revised to read as 
follows:

    Authority: 42 U.S.C. 3535(d).

    8. The heading of subpart 2404.8 is revised to read as follows: 

[[Page 46155]]


Subpart 2404.8--Government Contract Files

    9. Section 2404.805-1 is redesignated as 2404.805 and amended by 
revising the section heading and paragraph (a), to read as follows:


2404.805  Storage, handling and disposal of contract files.

    (a) Unsuccessful cost and technical proposals shall be retained in 
the contracting activity for a period of two months following the 
contract award as reference material for debriefings. Upon expiration 
of the two month period, the contracting office shall either:
    (1) Retain one copy of each such proposal with the official 
contract file; or,
    (2) Ship one copy of each unsuccessful bid or proposal to the 
Federal Records Center unless a debriefing has been requested but not 
held, or a protest is pending concerning the procurement. In no event 
shall these documents be destroyed before expiration of the retention 
periods in FAR 4.805.
* * * * *

PART 2405--PUBLICIZING CONTRACT ACTIONS

    10. The authority citation for part 2405 is revised to read as 
follows:

    Authority: 40 U.S.C. 486(c); 41 U.S.C. 253; 42 U.S.C. 3535(d); 
and FAR class deviation approved November 15, 1990.

Subpart 2405.3--[Removed]

    11. and 12. Subpart 2405.3 Synopses of Contract Awards is removed.

PART 2406--COMPETITION REQUIREMENTS

    13. The authority citation for part 2406 is revised to read as 
follows:

    Authority: 40 U.S.C. 486(c); 41 U.S.C. 253; 42 U.S.C. 3535(d).

    14. Section 2406.304-70 is revised to read as follows:


2406.304-70  Approval of the justification--field procurements.

    (a) The justification for other than full and open competition for 
field procurements shall be approved in writing--
    (3) For a proposed contract more than $1 million but not exceeding 
$10 million, by the Director, Office of Procurement and Contracts.


2406.304-71  [Removed]

    15. Section 2406.304-71 is removed.
    16. Section 2406.501 is revised to read as follows:


2406.501  Requirement.

    The Senior Procurement Executive shall designate the Department's 
competition advocate by Federal Register notice. Contracting activity-
level competition advocates shall be appointed by each HCA.

PART 2413--SMALL PURCHASES AND OTHER SIMPLIFIED PURCHASING 
PROCEDURES

    17. The authority citation for part 2413 continues to read as 
follows:

    Authority: 40 U.S.C. 486(c); 42 U.S.C. 3535(d).

    18. The heading of part 2413 is revised to read as follows:

PART 2413--SIMPLIFIED ACQUISITION PROCEDURES


2413.107  [Redesignated as 2413.106-2]

    19. Section 2413.107 is redesignated as 2413.106-2 and revised to 
read as follows:


2413.106-2  Data to support purchases.

    (d) Contracting officers may use Form HUD-24007, Purchase/Delivery 
Order Data File, to record all relevant data pertaining to a small 
purchase, including recording written and oral quotations received and 
documenting orders against GSA contracts.


2413.403  [Redesignated as 2413.402]

    20. Section 2413.403 is redesignated as 2413.402 and revised to 
read as follows:


2413.402  Agency responsibilities.

    (c) Policies and procedures governing the operation of imprest 
funds are established in internal directives issued by HUD's Office of 
the Chief Financial Officer.


2413.404  [Redesignated as 2413.403]

    21. Section 2413.404 is redesignated as 2413.403 and revised to 
read as follows:
2413.403   Conditions for use.

    (a) Transaction limits above that established in FAR 13.403(a) may 
be approved by the Senior Procurement Executive.


2413.505-2   [Redesignated as 2413.505-1]

    22. Section 2413.505-2 is redesignated as 2413.505-1 and revised to 
read as follows:


2413.505-1   Optional Form (OF) 347, order for supplies and services, 
and Optional Form 348, order for supplies and services schedule-
continuation.

    (b) For small purchases charged to the FHA Fund, contracting 
officers may use Form HUD-2542, Purchase Order and Payment 
Authorization.
    23. A new subpart 2413.6 and a new section 2413.601 are added to 
read as follows:

Subpart 2413.6--Micro-Purchase


2413.601   General.

    (c) HUD's procedures concerning the use of the government-wide 
commercial purchase card are contained in its Handbook on the 
Government-wide Commercial Credit Card Program.

PART 2414--SEALED BIDDING

    24. The authority citation for part 2414 is revised to read as 
follows:

    Authority: 40 U.S.C. 486(c); 41 U.S.C. 253; 42 U.S.C. 3535(d).

    25. Section 2414.406-4 is revised to read as follows:


2414.406-4   Mistakes after award.

    (d) For determinations under FAR 14.406-4(b)(1) and (2), the Head 
of the Contracting Activity will obtain the concurrence of legal 
counsel before notification to the Contractor. The Contracting Officer 
shall be notified promptly of action to be taken.

PART 2415--CONTRACTING BY NEGOTIATION

    26. The authority citation for part 2415 is revised to read as 
follows:

    Authority: 40 U.S.C. 486(c); 41 U.S.C. 253; 42 U.S.C. 3535(d).

    27. In section 2415.407, new paragraphs (b) and (c) are added, to 
read as follows:


2415.407   Solicitation provisions.

* * * * *
    (b) The contracting officer shall use the language at Alternate I 
to request cost and pricing data when it is anticipated that a contract 
or subcontract resulting from this solicitation will exceed $500,000 in 
value. This language shall also be used for those instances when the 
contracting officer determines that full cost and pricing data are 
required pursuant to FAR 15.804-2(a)(3).
    (c) In those instances when certified cost and pricing data are not 
required because an action is $500,000 or less, the contracting officer 
may request partial or limited data in order to determine a reasonable 
price (see FAR 15.804-6(a)(2)). The contracting officer shall request 
only that data which is considered necessary to determine a reasonable 
price. If partial or limited data is required, the contracting officer 
may adapt the content of Alternate I to 

[[Page 46156]]
suit the circumstances of the procurement, or develop additional text 
as required.


2415.408   [Removed]

    28. Section 2415.408 is removed.


2415.411   [Removed]

    29. Section 2415.411 is removed.


2415.411-70   [Removed]

    30. Section 2415.411-70 is removed.
    31. Section 2415.604 is revised to read as follows:


2415.604   Responsibilities.

    (b) The technical requirements related to source selection shall be 
performed by a Technical Evaluation Panel (TEP). Generally, a TEP will 
consist of three to five voting members, with one member serving as the 
chairperson. For more complex procurements, the TEP may add advisors 
and/or a committee structure to focus on specific technical issues or 
concerns. For inexpensive or routine acquisitions of equipment, 
supplies or services, the TEP may consist of one technical 
representative. The TEP is responsible for documenting the evaluation 
of all proposals as appropriate to the source selection approach in 
use, and for making the source selection recommendation(s).
    (c)(4) The selection of the source(s) for contract award shall be 
made by:
    (i) The contracting officer for awards using the ``lowest-priced 
technically-acceptable proposal'' approach; or,
    (ii) The Source Selection Official (SSO) for awards based on the 
``best value'' approach.
    32. Section 2415.605 is revised to read as follows:


2415.605   Evaluation factors.

    (c) The solicitation shall state the basis for the source selection 
decision as either ``lowest-priced technically-acceptable proposal'' 
(LPTAP) or ``best value'' (see 2402.1, Definitions).
    (e) When using the best value approach, each technical evaluation 
factor and subfactor shall be assigned a numerical weight (except for 
pass-fail factors) which shall appear in the RFP. When using LPTAP, 
each evaluation factor is applied on a ``pass-fail'' basis; numerical 
scores are not assigned. ``Pass-Fail'' evaluation factors define a 
standard of comparison for solicitation/contract requirements which 
proposals either completely satisfy or fail to meet.
    33. In section 2415.608, paragraph (a) is revised to read as 
follows:


2415.608   Proposal evaluation.

    (a) After receipt of proposals, the Contracting Officer will 
forward copies of the technical portion of each proposal to the TEP 
Chairperson or his or her designee. The cost/price portion of each 
proposal shall be retained by the Contracting Officer pending initial 
technical evaluation by the TEP.
    (2) Technical evaluation. The TEP shall rate each proposal based on 
the evaluation factors specified in the solicitation. The TEP shall 
identify each proposal as being either acceptable, unacceptable but 
capable of being made acceptable, or unacceptable. A proposal shall be 
considered unacceptable if it is so clearly deficient that it cannot be 
corrected through written or oral discussions. Under the best value 
approach, predetermined cut-off scores designed to determine a 
threshold level of acceptability of proposals shall not be employed. 
However, under solicitations where mandatory requirements are 
established, those proposals that do not meet the mandatory 
requirements may be found unacceptable without further review.
    (3) A technical evaluation report, which complies with FAR 
15.608(a)(2), shall be prepared and signed by the technical 
evaluator(s), furnished to the contracting officer, and maintained as a 
permanent record in the official procurement file.
* * * * *


2415.609  [Removed]

    34. Section 2415.609 is removed.
    35. A new section 2415.611 is added to read as follows:


2415.611   Best and final offers.

    (d) After receipt and evaluation of best and final offers, the TEP 
shall document its selection recommendation(s) in a final written 
report. The final report shall include sufficient information to 
support the recommendation(s) made, appropriate to the source selection 
approach and type and complexity of the acquisition.


2415.612   [Removed]

    36. Section 2415.612 is removed.


2415.612-70   [Removed]

    37. Section 2415.612-70 is removed.
    38. In section 2415.613, paragraph (a) is revised to read as 
follows:


2415.613   Alternative source selection procedures.

    (a) The Department of Housing and Urban Development uses procedures 
authorized by FAR 15.613 for all research and development contracts and 
other contracts where the contractor's proposed methodology of carrying 
out the work is a significant selection factor and the award decision 
will follow the best value approach.
* * * * *
    39. Section 2415.613-70 is revised to read as follows:


2415.613-70   Technical evaluation.

    The TEP shall perform the required technical evaluation of 
proposals received in accordance with 2415.608.
    40. In section 2415.613-72, paragraph (a) is revised to read as 
follows:


2415.613-72  Selection and final negotiation.

    (a) Selection. After the close of discussions and receipt of best 
and final offers, the TEP shall perform a final evaluation and prepare 
its selection recommendation for the SSO. Based on this evaluation, the 
SSO shall select for final contract negotiation the offeror(s) whose 
proposal is most advantageous to the Government in terms of price/cost, 
technical and other relevant factors included in the solicitation.
* * * * *

PART 2416--TYPES OF CONTRACTS

    41. The authority citation for part 2416 is revised to read as 
follows:

    Authority: 40 U.S.C. 486(c); 41 U.S.C. 253; 42 U.S.C. 3535(d).

Subpart 2416.3--[Removed]

    42-44. Subpart 2416.3--Cost-Reimbursement Contracts is removed.

PART 2426--OTHER SOCIOECONOMIC PROGRAMS

    45. The authority citation for part 2426 continues to read as 
follows:

    Authority: 40 U.S.C. 486(c); 42 U.S.C. 3535(d).

Subpart 2426.1--[Redesignated as Subpart 2426.70]

    46. The heading, subpart 2426.1--Minority Business Enterprises, is 
redesignated as subpart 2426.70.


2426.101   [Removed]

    47. Section 2426.101 is removed.


2426.102   [Removed]

    48. Section 2426.102 is removed.


2426.103   [Removed]

    49. Section 2426.103 is removed.

Subpart 2426.2--[Removed]

    50-51. Subpart 2426.2--Historically Black Colleges and Universities 
is removed.
    52. A new section 2426.701 is added, to read as follows:


2426.701  Policy.

    It is the policy of the Department to foster and promote Minority 
Business 

[[Page 46157]]
Enterprise (MBE) participation in its procurement program, to the 
extent permitted by law and consistent with its primary mission. A 
``minority business enterprise'' is a business which is at least 51 
percent owned by one or more minority group members; or, in the case of 
a publicly-owned business, one in which at least 51 percent of its 
voting stock is owned by one or more minority group members, and whose 
management and daily business operations are controlled by one or more 
such individuals. For this purpose, minority group members are those 
groups of U.S. citizens found to be disadvantaged by the Small Business 
Administration pursuant to Section 8(d) of the Small Business Act.
    53. A new section 2426.702 is added, to read as follows:


2426.702  Responsibility.

    The Director of the Office of Small and Disadvantaged Business 
Utilization (OSDBU) develops Departmental MBE plans and policies in 
accordance with Executive Orders 11625 and 12432 and by directive from 
the Secretary. He or she provides advice and guidance to the Secretary 
and Primary Organization Heads on MBE functions, reviews and makes 
recommendations to the Secretary on MBE annual plans and goals, 
monitors and evaluates the Department's MBE program, and reports on MBE 
program performance to the Department of Commerce.
    54. A new section 2426.703 is added, to read as follows:


2426.703  Solicitation provision.

    Contracting officers shall request all interested contractors, 
bidders, or offerors (including those responding to requests for 
quotations) to complete the certification at 2452.226-70, Certification 
of Status as a Minority Business Enterprise. Completion of this 
certification is voluntary and is not a condition of eligibility for 
contract award.

PART 2428--BONDS AND INSURANCE

    55. The authority citation for part 2428 continues to read as 
follows:

    Authority: 40 U.S.C. 486(c); 42 U.S.C. 3535(d).

Subpart 2428.2--[Removed]

    56.-58. Subpart 2428.2--Sureties is removed.

PART 2429--TAXES

    59. The authority citation for part 2429 is revised to read as 
follows:

    Authority: 42 U.S.C. 3535(d).

    60. Section 2429.101 is revised to read as follows:


2429.101  Resolving tax problems.

    In order to have uniformity in HUD's treatment of the tax aspects 
of contracting and ensure effective cooperation with other Government 
agencies on tax matters of mutual interest, the Office of General 
Counsel has the responsibility within HUD for handling all those tax 
problems. Therefore, the contracting activity will not engage in 
negotiation with any taxing authority for the purpose of determining 
the validity or applicability of, or obtaining exemptions from or 
refund of, any tax. When a problem exists, the Contracting Officer 
shall request, in writing, the assistance of legal counsel. The request 
shall detail the problem and be accompanied by appropriate backup data. 
Counsel shall report to the Contracting Officer as to the necessary 
disposition of the tax problem. The Contracting Officer will notify the 
contractor of the outcome of the tax problem. Counsel is responsible 
for communications with the Department of Justice for representation or 
intervention in proceedings concerning taxes.

PART 2432--CONTRACT FINANCING

    61. The authority citation for part 2432 continues to read as 
follows:

    Authority: 31 U.S.C. 3901-3906; 40 U.S.C. 486(c); 42 U.S.C. 
3535(d).

    62. Section 2432.402 is revised to read as follows:


2432.402  General.

    (e)(1) The Determination and Findings required by FAR 
32.402(c)(1)(iii) shall be made by the Director, Office of Procurement 
and Contracts for Headquarters contracts, or the cognizant Director, 
Administrative Services Center Contracting Division for field 
contracts.
    (2) Each advance payment situation shall be coordinated with the 
head of the cognizant accounting office, before authorization may be 
given, to ensure that there are controls in place to assure proper 
administration of advance payments.
    63. Section 2432.906 is revised to read as follows:


2432.906  Contract financing payments.

    Except for construction contracts (see FAR 52.232-27), periods for 
payment shorter than 30 days shall not be specified in contracts 
without the prior approval of the cognizant accounting office to ensure 
that procedures are in place to allow timely payment.
    64. Section 2432.908 is revised to read as follows:


2432.908  Contract clauses.

    (a) The Contracting Officer shall insert a clause substantially the 
same as provided at 2452.232-70, Payment Schedule and Invoice 
Submission (Fixed-Price), in all fixed-price solicitations and 
contracts. The clause with its Alternate I may be used for 
solicitations and contracts issued by the Administrative Service 
Centers.
    (b) The Contracting Officer shall insert a clause substantially the 
same as provided at 2452.232-71, Voucher Submission (Cost-
Reimbursement), in all cost-reimbursement solicitations and contracts 
when vouchers are to be sent directly to the paying office. The clause 
with its Alternate I may be used for solicitations and contracts issued 
by the Administrative Service Centers.

PART 2436--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

    65. The authority citation for part 2436 is revised to read as 
follows:

    Authority: 40 U.S.C. 486(c); 42 U.S.C. 3535(d).

    66. In section 2436.602-2, paragraphs (a) introductory text, 
(a)(2), and (c) are revised, and paragraph (a)(3) is removed, to read 
as follows:


2436.602-2  Evaluation boards.

    (a) Each architect-engineer evaluation board, whether permanent or 
ad hoc (which may include preselection boards), shall consist of at 
least three voting members who are Federal employees from the 
appropriate program area or from Federal offices outside the program 
area as appropriate. One member of each board shall be appointed 
chairperson. Non-voting advisors may also be appointed, including 
private practitioners in architecture, engineering and related 
professions. The members of a permanent board shall be appointed for a 
period of two years. Appointment shall be made by the following 
authorities with copies of appointment memoranda furnished to the 
appropriate contracting activity:
    (1) * * *
    (2) The cognizant program office head within the State or Area 
Office for boards appointed at the field level.
    (c) Conflict of interest. Each board member, whether voting or 
nonvoting, shall be advised of, and presumed to be familiar with the 
regulations at 24 CFR Part 0, Standards of Conduct, regarding conflicts 
of interest. If at any time during the selection process a board member 
encounters a situation with one or more of the firms being considered 
that might be or might appear to be a conflict of interest, he or she 
will 

[[Page 46158]]
disqualify him or herself and call it to the attention of the 
chairperson for resolution and proper action. The chairperson will 
refer the matter to legal counsel.
* * * * *
    67. Section 2436.602-4 is revised to read as follows:


2436.602-4   Selection authority.

    (a) The final selection decision shall be made by the appropriate 
Primary Organization Head (Headquarters) or the appropriate program 
office head at the cognizant State or Area Office (Field).
PART 2437--SERVICE CONTRACTING

    68. The authority citation for part 2437 continues to read as 
follows:

    Authority: 40 U.S.C. 486(c); 42 U.S.C. 3535(d).

    69. Section 2437.205 is revised to read as follows:


2437.205  Management controls.

    Documentation of the contractor's performance and the utility of 
products or services delivered shall be recorded on Form HUD-24002, GTR 
Performance Assessment (Final) by the responsible Government Technical 
Representative. This form may also be used to document contractor 
performance on other contracts.

PART 2452--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    70. The authority citation for part 2452 continues to read as 
follows:

    Authority: 40 U.S.C. 486(c); 42 U.S.C. 3535(d).

    71. Section 2452.215-70 is revised to read as follows:


2452.215-70  Proposal content and outline.

    As prescribed in 2415.407(a), insert the following solicitation 
provision in all negotiated solicitations over the small purchase 
limitation:

PROPOSAL CONTENT AND OUTLINE (Insert Month, Year)

    (a) Proposals shall be submitted in two separate parts as 
further described below and shall be enclosed in a sealed envelope 
and addressed to the office specified in the solicitation. The 
envelope must show the hour and date specified in the solicitation 
for receipt, the solicitation number, and the name and address of 
the offeror. Part I shall consist of the technical and management 
submittal of the proposed work. Part II shall consist of a business 
proposal comprised of, cost and pricing data, (if required), and the 
offeror's representations and certifications. Each part of the 
proposal shall be complete in itself so that the evaluation of both 
parts can be accomplished concurrently, and the evaluation of the 
technical and management submittal can be made strictly on the basis 
of its merit.
    (b) Proposals shall be submitted in [insert number] copies of 
each Part I and [insert number] copies of Part II.

(c) Part I--Technical and Management

    Section 1: Proposal Coverage. Cover the scope of work and 
general objectives which the proposal addresses.
    Section 2: Tasks and Methods. Describe the principal tasks or 
sub-projects to be undertaken together with a discussion of their 
relationships to each other. Discuss the considerations for 
selecting, performing and the time sequencing of the tasks or sub-
projects. Describe and discuss the method of personnel training and 
field personnel recruitment and the method of project control to be 
applied to the project to ensure timely, professional and quality 
performance. The Contractor must clearly state his/her plans for 
project management and in providing current and updated project 
progress to HUD during those phases of Contractor performance that 
require substantial coordination with HUD personnel.
    Section 3: Organization and Staffing. Include an organizational 
chart for the project showing the name of the project manager and 
the names of key personnel. Include a brief resume for each person 
shown on the special qualifications applicable to the performance of 
the project. Describe the specific effort to be contributed to the 
project by each of the key personnel and include a statement 
expressed either in percentage or person-hours that each will devote 
to the effort. Include a summation of the minimum person-hours or 
person-months of professional effort to be used in completing the 
project. Describe the physical facilities to be used. If 
consultants, advisors or subcontractors are to be used, describe the 
arrangements and include resumes of the Key personnel.
    Section 4: Prior and Current Experience. Include a list of 
projects currently in progress and/or completed within the last two 
years which are relevant to this procurement. Include names, 
addresses, and telephone numbers of contact points with these 
clients. The Government reserves the right to request information 
from any source so named.
    Section 5: Conflicting or Multiple Use of Contractor Resources. 
Include a description of the contractor's current or planned 
projects that may draw upon resources or personnel, including top 
management, proposed to be committed to this project. Explain how 
such conflicting or multiple uses will be resolved to avoid 
impairing the timely, professional, and high-quality performance of 
this project. If the proposer has one or more existing HUD projects 
that will run concurrently with this project, explain how the level 
of attention described in the proposal will be preserved across 
projects.
    The Government reserves the right to downgrade the related 
Factor for Award score for any proposal that does not adequately and 
credibly address such conflicts or multiple uses.
    Section 6: Security Investigation. The offeror shall address in 
its technical proposal how it intends to manage the security of 
automated systems as required by HUDAR clause 2452.237-76. This 
includes developing security procedures, requesting background 
investigations for employees and subcontractors as required, and 
requesting investigations for replacements of such individuals as 
necessary due to turnover, rotation, or other reasons.

(d) Part II--Business Proposal

    Section 1: Representations and Certifications. The Offeror's 
Representations and Certifications provided in Section K of this 
solicitation shall be included in this section.

(End of provision)

ALTERNATE I (Insert Month, Year)

    This alternate shall be used as prescribed at 2415.407(b) when 
the submission of cost and pricing data are required. In such cases, 
add the following Section 2 to paragraph (d) of the basic provision:
    Section 2: Cost and Pricing Data. The offeror shall furnish cost 
or pricing data using the SF-1411, Contract Pricing Proposal, 
provided in Section L of this solicitation, and the instructions 
attached to it, which are also printed at FAR 15.804-6. Round all 
amounts to the nearest dollar. Your data will be subject to review 
and evaluation by various Government personnel, and thus the 
estimates furnished on the SF-1411 should be supported by the 
required supplementary data so that the review and evaluation can be 
conducted with a minimum amount of delay and effort. In particular, 
ensure that the following essential elements are provided:
    (i) A summary of total cost by cost element cross-referenced to 
each proposed contract line item (instruction number 1).
    (ii) Identification of the basis for the kinds, quantities, and 
cost of all material elements proposed; and a consolidated priced 
summary of individual material quantities, or a consolidated priced 
bill of material (BOM), for the entire proposal. A well prepared BOM 
includes: part number/description, unit cost, quantity required, any 
nonrecurring costs, extended cost, and basis for the proposed price 
(quotation, prior buy, similar item, etc.) (instruction number 1, 
Materials).
    (iii) For each subcontract over $500,000 show: source, 
deliverable, quantity, price, type of subcontract, degree of 
competition, basis for selecting vendor and establishing 
reasonableness of price. When required, the subcontractor's cost or 
pricing data must be submitted with the offeror's initial proposal. 
If available and if required by FAR 15.806, the contractor should 
provide the results of review and evaluation of subcontract 
proposals. Though not required, the offeror should provide reasons 
for omitted data/reviews with dates when the data/reviews will be 
available (instruction number 1, Materials).
    (iv) A Justification, submitted on an SF-1412, Claim for 
Exemption from Submission of Certified Cost or Pricing Data, when 
claiming an exemption from submitting cost or pricing data 
(instruction number 1, Materials). 

[[Page 46159]]

    (v) A time phased, e.g., quarterly, annual, breakdown of labor 
rates and hours by category or skill level, and the basis for the 
estimates of rates and hours, e.g., historical experiences, 
engineering estimates, learning curves, etc. If labor is the 
allocation base for indirect costs, summarize for each overhead pool 
and year (instruction number 1, Direct Labor).
    (vi) In the absence of a forward pricing rate agreement or 
indirect rate proposal, the contractor should show how indirect 
rates were estimated and applied as a basis for evaluating the 
reasonableness of the proposed rates. Support for the indirect rates 
could consist of cost breakdowns, trends, and budgetary data 
(instruction number 1, Indirect Costs).
    (vii) Identification of all other costs by category and basis 
for pricing (instruction number 1, Other Costs).
    (viii) When claiming cost of money, the contractor must submit 
Form CASB-CMF and show the calculation of the proposed amount 
(instruction number 1, Facilities Capital Cost of Money).
    (ix) Identification of cost or pricing data, i.e., data that are 
verifiable and factual, and an explanation of the estimating 
process. When applicable, the following items should be specifically 
identified:
    (A) Judgmental factors and the methods used in the estimate, 
including those used in projecting from known data; and
    (B) The nature and amount of any contingencies (instruction 
number 2).
    (x) An index referencing all cost or pricing data and 
information accompanying or identified in the proposal (instruction 
number 4).
    (xi) For change order proposals: an estimate of the cost to 
complete deleted work not yet performed; identification of the 
actual or estimated cost of deleted work already performed; and an 
estimate of the cost of work added (instruction number 7B).

(End of provision)

    72. In section 2452.219-70, the section heading and Alternate I are 
revised to read as follows (and footnote 8 is removed):


2452.219-70  Small Business and Small Disadvantaged Business 
Subcontracting Plan.

* * * * *
ALTERNATE I (DEC 1992)

    This alternate is required for all sealed bid solicitations 
exceeding $500,000 ($1,000,000 for construction) that are not set 
aside for small business. In such cases, insert the following 
paragraph (d) for that in the basic clause:
    (d) The contract expected to result from this solicitation will 
contain the clause at FAR 52.219-9, ``Small Business and Small 
Disadvantaged Business Subcontracting Plan (Alternate I).'' The 
offeror submitting the apparent low bid, upon request by the 
Contracting Officer, shall submit a subcontracting plan, where 
applicable, which addresses separately subcontracting with small 
business concerns and small disadvantaged business concerns, and 
which shall be included in and made a part of the resultant 
contract. The Contracting Officer will review the adequacy of the 
subcontracting plan as part of the responsibility determination (FAR 
subpart 9.1). Failure to submit an adequate subcontracting plan 
where applicable shall make the offeror ineligible for the contract 
award.

(End of provision)

    73. Section 2452.226-70 is revised to read as follows:


2452.226-70  Certification of status as a minority business enterprise.

    As prescribed in 2426.703, insert the following provision in all 
solicitations:

CERTIFICATION OF STATUS AS A MINORITY BUSINESS ENTERPRISE

(August 1995)

    Bidder, Offeror or Supplier certifies that he or she ______ is, 
______ is not, (check one), a minority business enterprise which is 
defined as a business which is at least 51 percent owned by one or 
more minority group members or, in the case of a publicly owned 
business, at least 51 percent of its voting stock is owned by one or 
more minority group members, and whose management and daily 
operations are controlled by one or more such individuals. For the 
purpose of this definition, minority group members are:

(Check the box applicable to you)

[  ] Black Americans
[  ] Hispanic Americans
[  ] Native Americans
[  ] Asian Pacific Americans
[  ] Asian Indian Americans

    74. In section 2452.232-70, Alternate I is revised to read as 
follows:


2452.232-70  Payment schedule and invoice submission (fixed-price).

* * * * *

ALTERNATE I (MAR 1988)

    This alternate may be used in fixed-price contracts awarded by 
the Administrative Service Centers. In such cases, substitute the 
following paragraph (c) for that in the basic clause:
    (c) Invoices shall be submitted in an original and three (3) 
copies to the office identified on the cover page of the contract 
(SF-26 or SF-33). To constitute a proper invoice, the invoice must 
include all items per FAR 52.232-25, ``Prompt Payment.''

    75. In section 2452.232-71, Alternate I is revised to read as 
follows:


2452.232-71  Voucher submission (cost-reimbursement).

* * * * *

ALTERNATE I (MAR 1988)

    This alternate may be used in cost-reimbursement contracts 
awarded by the Administrative Service Centers. In such cases, 
substitute the following paragraph (a) for that in the basic clause:
    (a) The Contractor shall submit, on a monthly basis [Contracting 
Officer may substitute a different time frame, if appropriate], an 
original and three (3) copies of each voucher. In addition to the 
items necessary per FAR 52.232-25, ``Prompt Payment,'' the voucher 
shall show the elements of cost for the billing period and the 
cumulative costs to date. All vouchers shall be submitted to the 
Contracting Officer specified on the cover page of the contract (SF-
26 or SF-33).

    75a. In section 2452.237-77, footnote 9 is redesignated as footnote 
8.

PART 2453--FORMS

    76. The authority citation for part 2453 is revised to read as 
follows:


2452.237-77  [Footnote 9 redesignated as Footnote 8]

    Authority: 40 U.S.C. 486(c); 42 U.S.C. 3535(d).

    77. Section 2453.213-71 is revised to read as follows:


2453.213-71  HUD Form 2542, Purchase Order and Payment Authorization.

    As prescribed in 2413.505-2(b), Contracting Officers may use HUD 
Form 2542 for small purchases charged to the FHA Fund.


2453.213-72  [Removed]

    78. Section 2453.213-72 is removed.
    79. A new section 2453.237-70 is added, to read as follows:


2453.237-70  HUD Form 24002, GTR Performance Assessment (Final).

    As prescribed in 2437.205, Government Technical Representatives 
shall use HUD Form 24002 to document the contractor's performance and 
the utility of products or services delivered. This form may also be 
used for other contracts.

    Dated: August 2, 1995.
Marilynn A. Davis,
Assistant Secretary for Administration.
[FR Doc. 95-21767 Filed 9-1-95; 8:45 am]
BILLING CODE 4210-01-P