Chapter 5 - Acquisition Management

Title	Section
Acronyms Used in this Chapter	iii
Introduction	1-1
Status of Previous Policy Issuances (AOIs, CPLs, CPMs, And IHS Circulars)	2-1
Authorities and Responsibilities	3-1
Ethics and Standards of Conduct	4-1
Acquisition Planning	5-1
Buy Indian Act Compliance and Contract File Review	6-1
Procurement Contracts - General	7-1
Small Purchases	8-1
Contract Award Files - Structure, Content, Maintenance	9-1
Architectural and Engineering Contracting	10-1
Construction Contracting	11-1
Automated Data Processing And Telecommunications Contracting	12-1
Acquisition of Health Care Services	13-1
Urban Projects -- Contracts	14-1
Unauthorized Commitments	15-1
Contract Protests, Disputes, and Appeals	16-1
Post-Award Guidance	17-1
Leasing Authority	18-1
Self-Determination Contracts	19-1
Tribal Self-Governance Compacts	20-1
Glossary of Terms	21-1
Index	22-1

Exhibit	Description
Manual Exhibit 5-5-1 [PDF - 2 MB]	IHS Buy Indian Act Deviation Form
Manual Exhibit 5-5-1A [PDF - 135 KB]	IHS IEE Representation Form
Manual Exhibit 5-5-2A	Summary of All Previous Policy Issuances
Manual Exhibit 5-5-5A	Acquisition Plan
Manual Exhibit 5-5-5B	Steps and Responsibilities in the Acquisition Cycle
Manual Exhibit 5-5-7A	A&E Commercial and 638 Construction Contracts Preaward Review and Approved Levels by Awarding Activities Office
Manual Exhibit 5-5-7B	IHS Comparison of Methods and Procurement
Manual Exhibit 5-5-7C	Sealed Bidding
Manual Exhibit 5-5-7D	Negotiated Procurement
Manual Exhibit 5-5-7E	Unsolicited Proposals - Record of Receipt
Manual Exhibit 5-5-7F	Unsolicited Proposal - Use and Disclosure of Data
Manual Exhibit 5-5-7G	Unsolicited Proposal - Certification by Offeror
Manual Exhibit 5-5-7H	Unsolicited Proposal - Acknowledgement of Receipt
Manual Exhibit 5-5-7I	Unsolicited Proposal - Use of Data Limited
Manual Exhibit 5-5-7J	Unsolicited Proposal - Request for Evaluation
Manual Exhibit 5-5-7K	Occupations/Classifications Subject to P.L. 101-630, Indian Child Protection and Family Violence Prevention act
Manual Exhibit 5-5-8A	Purchase/Service/Stock Requisition
Manual Exhibit 5-5-8B	Small Purchases
Manual Exhibit 5-5-9A	Commercial Supplies and Services File Index
Manual Exhibit 5-5-9B	Checklist - Contract Closeout
Manual Exhibit 5-5-10A	A&E Commercial and 638 Construction Contracts Preaward Review and Approved Levels by Awarding Activities Office
Manual Exhibit 5-5-10B	Architectural and Engineering Contracting Process
Manual Exhibit 5-5-11A	A&E Commercial and 638 Construction Contracts Preaward Review and Approved Levels by Awarding Activities Office
Manual Exhibit 5-5-11B	Construction Contracting (Sealed Bidding)
Manual Exhibit 5-5-12A	Purchase/Service/Stock Requisition
Manual Exhibit 5-5-12B	Delegation of Procurement Authority for Acquisition of Federal Information Processing (FIP) Resources
Manual Exhibit 5-5-13A	Sub Object Class Codes Processed and Paid by The IHS FI
Manual Exhibit 5-5-16A	Protests to the Agency
Manual Exhibit 5-5-16B	Public Health Service/Indian Health Service Protests to the Agency/Protest Before or After Award
Manual Exhibit 5-5-17A	Site Visit Report
Manual Exhibit 5-5-17B	Determination to Provide Government Property
Manual Exhibit 5-5-17C	Fixed-Price and Cost-Reimbursement Contract Closing Memorandum and Checklist
Manual Exhibit 5-5-18	Request for Ratification of Unauthorized Commitment (UAC)

ACRONYMS USED IN THIS CHAPTER

5-5.1  INTRODUCTION

1. Purpose.  This Chapter identifies, explains and clarifies Indian Health Service (IHS) policies and procedures for acquisition management.

   These policies and procedures are based on specific Federal statutes and regulations, including the Federal Acquisition Regulation (FAR); the Health and Human Services Acquisition Regulation (HHSAR); the Public Health Service Acquisition Regulation (PHSAR), with reference also to other current applicable chapters in the Indian Health Manual (IHM); IHS Circulars; IHS Special General Memoranda (SGM); IHS Contract Policy Memoranda (CPM); and other IHS Memoranda, such as the Indian Self-Determination Memoranda (ISDM).

   In FY 1994, the IHS was expected to outlay approximately $1.6 to $1.7 billion for all purposes.  Of this total amount, approximately 55% to 60% (i.e., $900 million to $1 billion) was spent in the form of direct expenditures, approximately 40% to 45% (i.e., $650 million to $750 million) was expended through contracts, and under 5% (i.e., less than $50 million) was outlayed in the form of grants and agreements.

2. Background.  The integrity of the IHS acquisition process must be maintained as a reflection of the IHS commitment to excellence in the management of its programs and fulfillment of its mission.

   Reference is made to Executive Order 12352, Federal Procurement Reforms, signed by President Ronald Reagan on March 17, 1982.  This Order requires each Executive Agency to:

   "... Designate a Procurement Executive with agency-wide responsibility to oversee development of procurement systems, evaluate system performance in accordance with approved criteria, enhance career management of the procurement workforce, and certify to the agency head that procurement systems meet approved criteria.”

   Subsequently, each PHS agency was required to conduct a self-assessment of their acquisition function to ensure the acceptability of their procurement practices.  The IHS system was certified by the Assistant Secretary for Management and Budget, Department of Health and Human Service (HHS) in September 1987 as part of the Health Resources and Services Administration’s procurement system.

   In 1989, the requirements of Executive Order 12352 were reinforced by the Administrator for Federal Procurement Policy in a memorandum that requested procurement officials to review their systems, identify any poor or improper procurement practices, and correct deficiencies.  In furtherance of this memorandum, HHS developed a list of systems and performance criteria to be used in conducting acquisition certification reviews of the various HHS contracting offices.  These criteria are compiled in the HHS Procurement Review Guide which was issued in final form in June 1993.  Beginning in 1989, the Division of Grants and Contracts, PHS began conducting reviews of a number of PHS contracting offices using the HHS Procurement Review Guide as the review protocol.

   The Division of Contracts and Grants Policy (DCGP), IHS, has also adopted the contract file review checklists contained in the HHS Procurement Review Guide for use by the IHS Awarding Activities Offices and for use by DCGP in conducting review of contract files submitted to IHS Headquarters for pre-award reviews.  The contents of these contract file checklists, as well as the factors relating to the efficient management of the procurement function contained in the HHS Procurement Review Guide, are reflected in this Manual Chapter.

3. Policy.  The Associate Director of the Office of Administration and Management (OAM) within IHS Associate Headquarters, the Directors of the IHS Area Offices and other Awarding Activities Offices and their respective functional managers for procurement are responsible for the uniform application and implementation of the Chapter 5 acquisition procedures.

   Within the IHS, the term “Awarding Activities Offices” includes: (1) the eleven IHS Area Offices and the Office of Health Program Research and Development (OHPRD) in Tucson, Arizona; (2) the Offices of Engineering Services (OES) within the PHS Regional Offices for Regions II, VI, and X; (3) the IHS Headquarters West in Albuquerque, New Mexico; (4) the IHS Supply Service Center in Perry Point, Maryland.

   IHS functional managers for procurement at Headquarters are responsible for providing technical and such other assistance as may be required by Area Directors and their staffs.

4. Revisions, Cancellations and Supplements.  The Director, IHS, with the support and assistance of the Principal Official Responsible for Acquisition (PORA), has the authority to revise this Chapter, in whole or in part, consistent with Federal statutes and regulations.

   Except when provisions in this Chapter explicitly indicate otherwise, the maintenance, administration, and operation of this IHM Chapter are to conform to the policy and procedural requirements established under the Indian Health Manual, Part 1, Chapter 1 - Indian Health Service Manual System.

   Any change, update, revision, or cancellation of any policy or procedure formalized by this Chapter issuance, or its supplement, must be made utilizing a Transmittal Notice (TN) and follow established IHS/OAM Division of Policy Management review, distribution, and control processes.

   Interim supplements to this Chapter, including various IHS numbered “memoranda” and circulars that originate at IHS Headquarters, may be issued and used to establish interim policies between periodic updates.  This Chapter is to be revised as needed, but no less than every two years to incorporate such interim policy revisions.  Such revisions are to be consistent with the requirements of the IHM, Part 1, Chapter 1.

   Numbered memoranda and circulars are cancelled by a supersession line.  To cancel a numbered issuance, an Errata Notice is issued using the same format as the item being cancelled, or a supersession line on a new issuance.

   As necessary, the respective Area Offices may issue Area specific supplements to this Chapter, provided that such supplements are first approved by the PORA and the Associate Director, OAM.

5. Preparation and Clearance of Revisions.  The PORA is responsible for maintaining this Chapter in accordance with the IHS/OAM Division of Management Policy circular and memorandum system.

   Area specific supplements are to be sent by the respective Area Director to the PORA, and the Associate Director for Administration and Management, IHS Headquarters, for review, clearance, and coordination prior to implementation.

6. Distribution and Control.  The PORA is responsible for the timely issuance of this IHM Chapter, its revisions and its supplements.

   A mailing list has been established by the IHS Directives and Delegations Control Officer to distribute this Chapter, and any subsequent revisions and/or supplements to all Headquarters, Area, and field activities that function as IHS Awarding Activities Offices.

7. Sequential Development of Chapter 5.  Part 5, Chapter 5 - Acquisition Management of the IHM consists of twenty substantive sections, plus a glossary and an index.

   Because of the broad range of policy matters covered by Chapter 5, a brief outline and discussion of its content and sequence of sections follows.

   The first four sections each discuss different introductory policies, procedures, and concepts involved in the IHS acquisition of supplies or services by contract or lease.  These four sections are: “Section 1--Introduction,” “Section 2--Status of Previous Policy Issuances (AOIs, CPLs, CPMs, and IHS Circulars),” ”Section 3--Authorities and Responsibilities”, and “Section 4--Ethics and Standards of Conduct.”

   “Section 5--Acquisition Planning” focuses on the various aspects and central importance of long-range, annual, and individual acquisition planning to the IHS procurement process.

   “Section 6--Buy Indian Policy” outlines IHS policy towards the preferential use of Indian-owned businesses as vendors in the acquisition of IHS supplies and services.

   “Section 7--Procurement-Contracts--General” is the essential section in Chapter 5 for obtaining a comprehensive overview of procurement contracting policies and procedures within the IHS.  Section 7 focuses on how to contract for supplies and services for the IHS, and covers key contracting policies and procedures for IHS acquisitions that exceed the “small purchase limitation” (currently $25,000 or less).  IHS contract procurements at or under the small purchase limitation are discussed in detail under “Section 8 -- Small Purchases.”

   Subjects discussed under Section 7 include the basic elements necessary for any contract, explanation of the two major Federal acquisition methods--sealed bidding and negotiation, the use of different types of contracts, and special considerations in IHS contracting.

   “Section 8--Small Purchases” examines the special policies and procedures that concern how to acquire supplies and services for the IHS when the total cost of the acquisition is at or under the small purchase limitation.

   “Section 9--Contract Award Files--Structure, Content, Maintenance” focuses on the importance of documentation throughout the acquisition process and the importance of establishing and maintaining file records throughout the life of a contract.

   Sections 10 through 13 each discuss a different IHS procurement contracting “special situation” that, in turn, requires certain special procedures depending on what is being purchased.

   These four special situation sections include: “Section 10--Architectural and Engineering Contracting”; “Section 11--Construction Contracting”; “Section 12--Automated Data Processing and Telecommunications Contracting”; and “Section 13--Acquisition of Health Case Services.”

   “Section 14--Urban Projects -- Contracts” concerns the policies that affect the IHS administered programs and contracts for health care services for American Indians and Alaskan Natives who live in urban areas, and who do not otherwise receive regular medical care through IHS facilities, or through Indian tribal Self-Determination contracts.

   “Section 15--Unauthorized Commitments” discusses the recurring problem of unauthorized contractual commitments, including how to avoid this problem and how to “cure” it through the ratification process.

   “Section 16--Contract Protests, Disputes, and Appeals” explains the procedures that the IHS follows when a contract protest, dispute, or appeal occurs, and ways to avoid such situations.

   “Section 17--Post-Award Guidance” concerns IHS contract administration policies and procedures, from the award of an acquisition contract through final contract close-out.

   “Section 18--Leasing Authority” focuses on IHS policies that govern leasing as an alternative to contract procurement.

   “Section 19--Self-Determination Contracts” provides references to current IHS policies and procedures that govern the special contractual relationship between the IHS and Indian tribal governments when the contracting authority specified under Public Law 93-638. the Indian Self-Determination and Education Assistance Act of 1975, as amended, is used to provide services that would otherwise be operated directly by the IHS.

   The references listed under this Section address special IHS responsibilities and procedures for Public Law 93-638 tribal contracts, since such 638 non-construction contracts are not subject to the FAR.  Tribal construction contracts are subject to the FAR and Agency supplemental acquisition regulations unless waived by the Secretary of HHS.

   “Section 20--Tribal Self-Governance Compacts” concerns the status of special IHS policies and procedures that govern contractual relationships with Indian tribes that receive Federal funding support under a tribal self-governance compact, as authorized under Public Law 100-472.

   “Section 21--Glossary” provides a brief definition for selected key terms used in this Chapter, while “Section 22--Index” provides a reference guide for finding topics discussed in this Chapter.

   A list of acronyms used in this Chapter is included after the “Table of Contents.”

5-5.2  STATUS OF PREVIOUS POLICY ISSUANCES

This chapter of the IHM consolidates a broad range of IHS and other policy issuances that concern IHS acquisitions.  As a policy consolidation vehicle, Chapter 5 -- Acquisition Management, supersedes the majority of these previously existing policy issuances as of September 30, 1994.

Manual Exhibit 5-5.2-A, which follows, provides a brief guide to the status of 74 such previous IHS policy issuances.  Included in this summary are 43 HRSA and IHS AOIs, 4 HRSA CPLs, 19 IHS CPLs, 5 IHS CPMs, plus 1 draft CPM, and 2 IHS Circulars.  For each of these policy issuances, Manual Exhibit 5-5.2-A provides: (1) the previous policy TN number; (2) the date issued; (3) the title or subject; (4) the status of each policy issuance as of the effective date of this IHM Chapter; and (5) a reference to where in this chapter the previous policy subject matter can be found.

5-5.3  AUTHORITIES AND RESPONSIBILITIES

1. Organizational Framework.  The Indian Health Service (IHS) is one of nine operating components that constitute the U.S. Public Health Service (PHS).

   The other eight PHS operating components are: the Agency for Health Care Policy and Research (AHCPR); the Agency for Toxic Substances and Disease Registry (ATSDR); the Centers for Disease Control and Prevention (CDC); the Food and Drug Administration (FDA); the Health Resources and Services Administration (HRSA); the National Institutes of Health (NIH); the Substance Abuse and Mental Health Services Administration (SAMHSA), and the Office of the Assistant Secretary for Health (OASH).

   The PHS is one of the four major operating divisions under the Office of the Secretary (OS) of the Department of Health and Human Services (HHS).  The other three major operating components are: the Administration for Children and Families (ACF); the Health Care Financing Administration (HCFA); and the Social Security Administration (SSA).

2. Regulatory Framework.  IHS acquisition policies and procedures are determined and governed by three distinct, yet interrelated levels of Federal regulations.

   The Federal Acquisition Regulation (FAR) is the primary regulation used by all Federal Executive agencies in their acquisition of supplies and services with appropriated funds.  The FAR is published in two volumes as Title 48-Chapter 1 of the Code of Federal Regulations (CFR).  Volume 1 of the FAR contains parts 1 through 51, and Volume 2 contains parts 52 and 53.  The FAR is issued within applicable laws under the joint authorities of the Administrator of the General Services Administration, the Secretary of Defense, and the Administrator of the National Aeronautics and Space Administration.  FAR structure and content also is based on broad policy guidelines established by the Office of Management and Budget (OMB) within the Executive Office of the President.

   The HHSAR establishes uniform acquisition policies and procedures for the HHS that conform to the FAR.  The HHSAR implements and supplements the FAR. Implementing material expounds upon or indicates the manner of compliance with the related FAR material.  Supplementing material is new material that is HHS unique in character, and that has no direct counterpart in the FAR.

   The HHSAR contains all formal Departmental policies and procedures that govern the acquisition process or otherwise control contracting relationships between HHS’s contracting offices and contractors.

   The PHSAR similarly establishes uniform acquisition policies and procedures throughout the PHS, of which the IHS is a part.  The PHSAR implements and supplements the HHSAR, but does not duplicate material published in either the HHSAR or the FAR.

   In summary, the order of regulatory precedence is: the FAR, the HHSAR, and the PHSAR. Each successive regulation either implements or supplements a higher order regulation. When referring to acquisition regulations that govern the IHS, it is necessary to review the FAR, HHSAR, and PHSAR.

3. IHS Policies and Procedures.  IHS policy and procedural guidelines are provided by directives through the IHS Manual System.  These directives are for IHS employees contracting for the IHS and the OES and are issued in the following authorized forms: Indian Health Manual (IHM) chapters and supplements; IHS circulars; IHS bulletins; and specialized IHS memoranda.  IHS directives address a broad range of acquisition and related topics.

   A more detailed description of the IHS directives system is provided in Section 1 of this Chapter, and a comprehensive discussion of the IHM is contained in Part 1, Chapter 1 - Indian Health Service Manual System.

   In addition to the IHS directive system, the Division of Contracts and Grants Policy (DCGP) also provides policy and procedure guidance on contract acquisition issues through the use of CPMs.

4. Head of the Contracting Activity.  As a PHS Agency Head, the Director of the Indian Health Service is the designated Head of the Contracting Activity (HCA) for the IHS.  The Director has delegated this authority to the Associate Director, Office of Administration and Management (OAM).

   The HCA is responsible for conducting an effective and efficient acquisition program within the IHS.  As prescribed in HHSAR 301.670-1. the HCA is to establish adequate controls that ensure compliance with applicable laws, regulations, procedures, and sound management practices.

5. Principal Official Responsible for Acquisition.  The Director of the Division of Contracts and Grants Policy, OAM, is designated as the Principal Official Responsible for Acquisition (PORA) for the IHS.  The PORA assists the HCA in carrying out the responsibilities associated with maintaining an efficient and effective acquisition program throughout the IHS.  Subordinate to the HCA, the PORA is directly responsible for the day-to-day management and operation of overall IHS acquisition activities.  As a result, the PORA provides both essential oversight and policy direction for IHS and other Awarding Activities Offices (HHSAR 302.1).

   The responsibilities of the PORA within the IHS include:

   1. issuing, as necessary, CPMs;
   2. ensuring consistency within IHS in the application of acquisition regulations, policies and procedures;
   3. identifying and resolving acquisition problems, conditions, or situations that are specific to the IHS;
   4. appointing IHS Contracting Officers, as prescribed by the HHSAR, and issuing Certificates of Appointment and Termination that specify limitations of authority;
   5. maintaining this IHM chapter to ensure that it remains current through use of the IHS/OAM Division of Management Policy system of IHM supplements, circulars, bulletins, and special memoranda;
   6. conducting oversight of IHS acquisition personnel to insure the integrity of the acquisition processes and procedures system;
   7. ensuring that all proposed contract actions exceeding prescribed thresholds are reviewed and approved prior to award;
   8. ensuring that all required reviews are conducted for Justifications for Other than Full and Open Competition (JOFOCs) and Advance Acquisition Plans;
   9. ensuring that all unauthorized commitments are fully documented and are submitted for review and approval; and
   10. approval of use of Letter contracts, as required by HHSAR 316.603-3.
6. Senior Contracting Officer.  The Senior Contracting Officer (SCO) in each of the respective Awarding Activities Offices serves as the respective Chief of the Contracting Office (CCO).  Each Awarding Activities Office has the authority to enter into acquisition contracts and other awards on behalf of the IHS.

   Candidates for SCO are selected and appointed by the Awarding Activities Offices Director, subject to the formal approval of the PORA.  The SCO is responsible for the day to day operation of acquisition activities at the Area, Service Unit, and Facility Levels, and for the direction and technical supervision of procurement staff employed at these locations.

   The SCO is supervised by the Awarding Activities Office Director.  The SCO also receives technical direction and oversight from the PORA for the proper administration of day-to-day acquisition functions.  An SCO has the authority to redelegate his/her authority consistent with his/her own delegation.

7. Area Directors.  Each IHS Area Director is responsible for supporting the HCA, the PORA, and their respective SCOs to ensure that the integrity of the IHS acquisition system is maintained.  This integrity is essential to the success of the IHS mission.

   This responsibility includes knowledge of and adherence to the acquisition regulations in the FAR, HHSAR, and PHSAR, and to the IHS Manual System directives.

8. Contracting Officers, Contract Specialists, and Purchasing Agents.  Properly trained acquisitions staff are essential in assisting program personnel in fulfilling IHS program requirements.

   Each Area SCO is supported by an acquisition staff composed of Contracting Officers, Small Business Technical Advisors, contract specialists, purchasing agents, procurement analysts, cost/price analysts, procurement assistants, and clerical support staff.  Workload is distributed to the acquisition staff by the SCO who must consider the complexity and dollar value of the acquisition, as well as the experience, training, HHS certification, and warrant level of the individual.

   The Contracting Officer (CO) is the authorized IHS agent responsible for the overall management, direction, and enforcement of contract regulations for a particular contract or other acquisition activity.  The CO also is responsible for organizing and coordinating the efforts of the various functional specialists and other support personnel who work on the contract.

   HHS certification is received through the HHS certification program for acquisition personnel.  This program has varying, progressive requirements obtained through experience and classroom training for the four levels of certification (HHSAR 301.6).  Certified staff are required to be familiar with the FAR, HHSAR, PHSAR, and IHS acquisitions policies and procedures in order to meet IHS performance objectives.

9. Project Officers.  Project Officers (POs) are a key operational link between IHS contractors and suppliers.

   The PO usually identifies an individual acquisition requirement during the annual Acquisition Planning activity through a meeting, or series of meetings, with the contracting staff before submitting a requisition or request for contract.  During this planning stage, the PO and the contracting staff informally discuss the procurement requirements (i.e., the nature of the purchase), and the best acquisition approach (i.e, how it should be purchased).  The PO could also be the Senior Program Official and, as such, would be involved in the acquisition planning process.

   In accordance with Section 5--Acquisition Planning, the PO is required to assist the acquisition staff in developing an Individual Acquisition Plan when such a plan is required.  Based on decisions resulting from such consultation, the PO and CO jointly are to develop a schedule of events and timetable that will result in meeting the procurement need in accordance with applicable regulations.

   Project Officer nominees are identified by appropriate, senior program officials, and are referred to the SCO for consideration.  The PO is selected and appointed by the CO, based on qualifications, experience, and training.  The PO serves as the CO’s “eyes and ears” with regard to contractor performance.  Nominations for appointment as a PO at each IHS organizational level -- Facility, Service Unit, Area Office, or Headquarters -- are to be made from among individuals who have experience and appropriate training, such as the successful completion of the HHS Project Officer course.

   After contract award, the PO serves as the primary contract monitor for contractor performance on behalf of the CO.  At this stage, the PO is responsible for tracking contract progress and for advising the CO, in writing, of contractor performance.  Whether purchasing supplies or services through use of a procurement contract or a small purchase arrangement, a PO is responsible for technical oversight and knowledge of the details of the acquisition requirement, and for monitoring the delivery of acceptable contractor supplies or services according to contract terms and conditions.

   The PO does not operate alone, but rather is a key member of the acquisition team.  The PO must concentrate on the responsibilities assigned by the CO in writing commensurate with the complexity of a particular award.

10. Small and Disadvantaged Business Utilization Specialist (SADBUS).  The Small and Disadvantaged Business Utilization Specialist (SADBUS) within IHS Headquarters is responsible for monitoring compliance with the various Federal socio-economic programs intended to promote the award of contracts to Indian economic enterprises, small business concerns, and small disadvantaged businesses, including minority-owned businesses, women-owned businesses, and businesses in labor surplus areas.

    Some of these socio-economic programs are authorized under the terms of the Small Business Act of 1958, (Public Law 85-536), as amended, and are centrally directed and coordinated by the Small Business Administration (SBA).  Other such programs are established by Executive Order of the President, and by other Federal statutes including the Buy Indian Act (25 U.S.C. 47).

    The IHS SADBUS recommends policies to the IHS Director and the PORA that will achieve the Federal goals and objectives of this Small Business Act program within the context of IHS procurement needs.  In addition, the IHS SADBUS coordinates activities and advises the Small Business Technical Advisors (SBTAs) who are located within each IHS Awarding Activities Office.

    General provisions concerning the Office of Small and Disadvantaged Business Utilization are contained under the FAR 19.201 through 19.202-6.  Specific duties of the SADBUS within the HHS are described and outlined under HHSAR 319.201-70.

11. Funds Certification Officer.  A Request for Contract (RFC) or the Requisition (SF-373) must be submitted to the certifying official to obtain the proper certification that funds are available to pay the costs of the proposed acquisition.  The certifying official is either the Finance Officer or other individual designated as a certifying official for the respective IHS Facility, Service Unit, Area, or Headquarters organizational component that has proposed the acquisition.  Each Awarding Activities Office shall maintain a list of all persons for offices under their purview who have been designated as certifying officials.  In no event, however, may a certifying official also be the individual initiating or approving the requirement.

    The certification is completed when the Finance Officer, or other certifying official, signs the Requisition Form 393 or the RFC.  This certification indicates that adequate funds to pay for the acquisition are available, and are reserved in the accounting records of the IHS Awarding Activities Office; or are currently unavailable, but will be made available upon receipt of appropriations.

5-5.4  ETHICS AND STANDARDS OF CONDUCT.

1. Overview.  As an Agency of the United States Federal Government, the IHS is governed by the specific standards of conduct that are found in various Federal laws and regulations.

   Many of these "basic" standards of conduct concern all IHS personnel, while others impose additional responsibilities on those individuals who hold positions or powers involving special or sensitive areas of trust or responsibility.  Thus, all IHS personnel share a number of "common" ethical responsibilities in the conduct of their Federal service.  Such common ethical responsibilities include those to the American people and taxpayers; to the American Indian and Alaska Native children and adults who are the beneficiaries of IHS services; to IHS vendors, contractors, and others who deal with the IHS; and to other IHS personnel.

   For all IHS personnel involved in procurement and other extramural award and agreement activities, special, additional ethical responsibilities are imposed.  These "extra" ethical responsibilities, imposed on all involved in the IHS acquisition, grant, and agreement processes, stem from the necessity to always conduct the business of the American people in a manner that is above reproach.

   To summarize, ethics within the IHS cover everything from standards of conduct imposed by statute and regulation to those imposed by custom and common sense.

2. Standards of Conduct.  Basic standards of conduct for the acquisition process are found in Part 3 of the FAR.  Standards of conduct for employees of HHS are found in 45 CFR Part 73 and in Personnel Pamphlet Series No. 7.  In addition, the U.S. Government Printing Office publishes and sells the August 1992 document, Standards of Ethical Conduct for Employees of the Executive Branch, which includes Executive Order 12674 of April 12, 1989, "Principles of Ethical Conduct for Government Officers and Employees" and the Final Rule of August 7, 1992, "Standards of Ethical Conduct for Employees of the Executive Branch," (5 CFR Part 2635), as published in the Federal Register of August 7, 1992 (pp 35006-35067).

   The regulations are designed to ensure that Government business is conducted effectively, objectively, and without improper influence or the appearance of improper influence.  As stated in FAR 3.101-1:

   "Transactions relating to the expenditure of public funds require the highest degree of public trust and an impeccable standard of conduct.  The general rule is to avoid strictly any conflict of interest, or even the appearance of a conflict of interest in Government-contractor relationships."

3. Conflict of Interest.  Conflicts of interest fall under two broad categories, “actual” and “apparent.” Actual conflicts of interest include the following:
   1. Engaging in a private business or professional activity where there would be a conflict between official duties and one’s private interests.
   2. Having a financial interest, either directly or indirectly, where there would be a conflict between official duties and the financial interest.  This includes the employee, the employee’s spouse, the employee’s children, any organization in which the employee serves as an officer, or an organization with which the employee may be negotiating or has an arrangement for prospective employment.
   3. Using, or giving the appearance of using, inside information to further a private interest of oneself or another person with whom one has family, business or financial ties.  Inside information is information available to the Government but not available to the public.
   4. Using one’s official position to get a financial benefit for oneself or another person.  Exercise care if you have a family, business, or financial connection with potential contracts with your agency.
   5. Acting as an agent in a claim against the United States.  This would include a claim before any Department, Court, or agency in which the United States is a party or has a direct and substantial interest.  Public Law 93-638 permits former IHS employees to serve as an agent for an Indian tribe.  The Secretary must be advised in these cases.

   Compared to actual conflicts of interest, apparent conflicts of interest are much more difficult to define or to prove.  To the general public, however, apparent conflicts are often more visible and, therefore, more difficult to disprove to the layman.  Since there is no clear definition, each employee should think about their actions and how their actions might be viewed by the public, and should guard against doing anything that might appear to give one person, group, or business an advantage over another.  Employees should also be especially careful if it might appear that the beneficiary is a friend or relative.

4. Gratuities.  FAR 3.101-2 states in part:

   “As a rule, no Government employee may solicit or accept, directly or indirectly, any gift, favor, entertainment, loan, or anything of monetary value from anyone who (a) has or is seeking to obtain Government business with the employee’s agency, (b) conducts activities that are regulated by the employee’s agency, or (c) has interests that may be substantially affected by the performance or nonperformance of the employee's official duties.  Certain limited exceptions may be authorized in agency regulations.”

   The definition of “gratuity” has been subject to different interpretations over the years.  There is no question that asking for or accepting money or presents would be considered gratuities.  However, food, drink, and transportation present another set of problems.  Currently, food, drink, and transportation are considered gratuities except in the following situations:

   1. Food and drink served at luncheons, dinners, and similar gatherings sponsored by an industrial, technical, or professional association are permitted if there are discussions of matters of mutual interest to Government and industry.  The sponsor must be an association, not a contractor.
   2. Customary social exchanges between personal friends and relatives are permitted if the exchange is on a personal basis.  However, care should be exercised if the “personal” friend is a contractor who has a contract with the Agency.  That could give the appearance of a conflict of interest.  This is an area where common sense must be used.
   3. Things available to the public at a trade show or exhibition.
   4. Participation in a community activity where the relationship with the contractor is remote, though the activity might be sponsored by the contractor.
   5. Local transportation provided by the contractor while on official business may be accepted when alternate arrangements are not practical.  However, this should be restricted to working hours.

   FAR 3.2 requires the clause at FAR 52.203-3 -- Gratuities, be included in solicitations and contracts, except those for personal services.  Agency personnel must report any suspected violations of the clause to the CO or other designated official.

   HHS reporting procedures are found in HHSAR 303.203.  These regulations require suspected violations of the clause to be reported under Subpart M, Reporting Violations, of the Department’s Standards of Conduct (45 CFR 73) and General Administration Manual, Chapters 5-10.

5. Anti-Trust Violations.  Contracting personnel must be alert to contractor practices that may be against Federal law or in violation of Federal regulations.  FAR 3.3 requires contracting personnel to report these practices to the Attorney General and the Agency official responsible for taking termination or debarment actions.

   HHSAR 303.3 requires that a copy of each suspected antitrust violation report be sent to the Attorney General and to the Director, Office of Acquisition and Grants Management, HHS.  The PORA should be notified immediately. Agency reports to the Department of Justice shall be sent to:

   Attorney General, U.S. Department of Justice Washington, DC 20530 Attn: Assistant Attorney General, Antitrust

   The report shall have a brief statement describing the suspected practice, the reason for the suspicion, and the name address and telephone number of the agency contact.

   Possible unlawful actions include:

   1. Identical bids on the same line items;
   2. Rotating low bids;
   3. Collusive price estimating systems; and
   4. Sharing of business.

   The fact that identical bids are received may not be due to an unlawful action.  It may simply be that a subcontractor quoted a price to more than one bidder.  FAR 3.303(c) explains the practices that may show there is a violation of the law.

6. Procurement Integrity.  In 1989, the Congress enacted new legal restrictions on Federal procurement officials and their counterparts in the private sector in response to a Pentagon investigation of military procurement problems code-named “Operation Ill-Wind.”  These new restrictions came in the form of an amendment to the Office of Federal Procurement Policy Act (OFPPA: Public Law 93-400, as amended).  Specifically, Section 814 of Public Law 101-189, the National Defense Authorization Act for Fiscal Years 1990 and 1991 (November 19, 1989) amended Section 27 of the OFPPA in order to strengthen and clarify various Federal procurement policies and procedures.

   The Public Law 101-189 Amendment (the 1989 Amendment) prohibits Government procurement officials and competing contractors from:

   1. Soliciting, disclosing, or obtaining protected procurement related information;
   2. Offering, giving, demanding, or receiving any money, gratuity, or other thing of value; or
   3. Soliciting, offering, accepting future employment, or a business opportunity.

   Regulations to carry out the 1989 Amendment to the OFPPA are found at FAR 3.104 and HHSAR 303.104.

   Definitions critical to understanding the law and its regulations are found at FAR 3.104-4 and HHSAR 303.104-4.  These definitions include, but are not limited to, the following:

   1. “Procurement official means any individual who has participated personally and substantially in the conduct of the procurement.” See HHSAR 303.104-4(h)(1) for a comprehensive listing of the classes of employees that HHS considers prospective “procurement officials” based on their participation in the conduct of a procurement.  The CO has the responsibility to decide who is a procurement official in a particular case.  The CO is responsible for consulting with the Office of the General Counsel if the situation is “particularly complex or sensitive.”  In those cases where a person designated as a procurement official disputes the designation, the PORA will make a final decision.  Any individual who serves as a procurement official shall be required to execute the one-time integrity certificate.
   2. “Participate personally and substantially” means active and significant involvement by the individual in activities directly related to the procurement.
   3. “Source selection information” includes documents that refer to, directly cite, or paraphrase proprietary or source selection information. See HHSAR 303.104-4(k)(1).
   4. “Competing contractor” with respect to any procurement... means ‘any entity that is, or is reasonably likely to become a competitor for or recipient of a contract or subcontract under such procurement, and includes any other person acting on behalf of such an entity’.  See FAR 3.104-4(a)(1) and (2).
   5. “During the conduct of any Federal agency procurement of property or services” means the period beginning with the development, preparation, and issuance of a procurement solicitation, and concluding with the award, modification, or extension of a contract, and includes the evaluation of bids, proposals, selection of sources, and conduct of negotiations.  See FAR 3.104-4(c)(1) and (2).
   6. A contract modification over $100,000 is a separate action for the purposes of procurement integrity certification.

   The following prohibitions apply during a procurement:

   1. There can be no offers of gratuities to procurement officials.
   2. There can be no attempts to obtain unauthorized access to procurement information protected by the OFPPA, i.e., Government source selection information, contractor proprietary data, or information.
   3. A competing contractor may not knowingly discuss, make an offer, or promise future employment or a business opportunity to a procurement official.  A procurement official may not accept or ask for any of these things.
   4. A competing contractor may not knowingly offer any money, gratuity, or other thing of value to a procurement official.  A procurement official may not accept or ask for any of these things.
   5. A contractor may not knowingly seek or obtain proprietary information submitted by a competing contractor.  A contractor may not seek or obtain the source selection information created by the procurement officials.  There is, also, a prohibition placed on procurement officials.  HHSAR 301.104-5(d) lists those persons who may have access to source selection information.  It requires the CO to include in the contract file the names and functions of any other individuals authorized access to proprietary or source selection information.  Also see HHSAR 301.104-5(c) as to the COs authority to authorize access to proprietary or source selection information.

   Certain certifications are required under the OFPPA when the contract or contract modification, individually or collectively, exceeds $100,000.  FAR 3.104-9(b) requires certifications by competing contractors.

   1. They must certify that, to the best of knowledge and belief, they have no information about any actual or possible violation of the OFPPA, either by a competing contractor or by a procurement official, and if they have such information, they must disclose it and certify that all information has been disclosed.
   2. They must affirm that all officers, employees, agents, etc., who participated personally and substantially in the procurement, have certified that they are familiar with conduct prohibited by the Act and will report any violations to them.

   When sealed bidding is used, the bid shall be rejected as nonresponsive if the certifications are not included with the bid and properly executed.  When negotiated acquisition is used, the successful offeror must submit the certifications in the time specified by the CO.  This must be done before the contract award.

   For contracts and contract modifications, that individually or collectively, exceed $100,000, the CO is also required to make a procurement integrity certification prior to award of the contract or modification.  The CO must (1) certify that, to the best of his/her knowledge and belief, he/she has no information concerning a violation or possible violation of the Act, as implemented by the FAR, or (2) disclose any such information and certify in writing that all such information has been disclosed.

   HHSAR 303.104-6 requires all procurement officials leaving IHS to complete the certification found in Chapter 1-90 of the General Administration Manual.  If an official leaves while conducting a procurement expected to result in a contract or contract modification, that individually or collectively exceeds $100,000 the Administrative Officer must send a copy of the certification to the CO to be included in the contract file.

   The SCO shall be responsible for insuring that proper procurement integrity certification files/records are maintained.  For processing violations or possible violations of procurement integrity, refer to HHSAR 303.104-11 for guidance.

7. Lobbying.  Section 319 of the Department of the Interior and Related Agencies Appropriations Act, Public Law 101-21, added a new section 1342 to Title 31 U.S.C. entitled “Limitation on Use of Appropriated Funds to Influence Certain Federal Contracting and Financial Transactions.”

   Section 1342 prohibits recipients of Federal contracts, grants, loans, or cooperative agreements from using appropriated funds for lobbying the executive or legislative branches of Government in connection with specific contract, grant, loan, or cooperative agreements.  It requires persons requesting or receiving a Federal contract, grant, or cooperative agreement over $100,000, or a loan over $150,000 to disclose lobbying with other than appropriated funds.

   Under FAR 3.801, Indian tribes, tribal organizations, or other Indian organizations are excluded from the definition of “person” with respect to “expenditures specifically permitted by other Federal law.”  Therefore, contracts entered into under P.L. 93-638 are not exempt from the requirements of 31 U.S.C. 1342.  FAR 3.8 cites the appropriate provision and clause to carry out the requirements.

   The CO is responsible for including the provision and the clause in all solicitations and shall also obtain the certifications and disclosures required by this provision and clause.  Copies of all contractor disclosures shall be sent to the responsible IHS official for action.  The original disclosure shall remain in the contract file.

5-5.5  ACQUISITION PLANNING

1. Overview of the Acquisition Planning Process.  Both the FAR at Subpart 7.1 and the HHSAR at Subpart 307.1 require that advanced procurement planning be accomplished on an annual and individual basis.

   Acquisition planning within the IHS ideally occurs along a time line that begins with long-range planning that is intended to promote competition in contracting.  Such planning is then projected for implementation in any current fiscal year according to a comprehensive Annual Acquisition Plan, and finally uses a well-designed individual Acquisition Planning Document (APD) as an important tool for the actual procurement of supplies and services in a timely, cost-effective, proper, and well-documented manner.

   A comprehensive understanding of past patterns in IHS procurement requirements is one characteristic mark of the IHS acquisition planning process.  Equally important, however, is a second characteristic mark:  a flexible responsiveness to unexpected human medical need.

   To be truly effective, IHS acquisition planning also must be flexible enough to anticipate and to accommodate dynamic and changing health care needs and conditions that are inevitable when the mission of the Agency is to provide responsive, quality health care services to the American Indian and Alaska Native population.

   Responsibility for feasible, effective acquisition planning rests with IHS managers and administrative personnel at each IHS organizational level.

   The Acquisition Planning process within the IHS absolutely requires cooperation and coordination among the PO, the CO, Program Personnel, and Area or Headquarters Reviewers if contract and program requirements are to be met in a timely, efficient and cost-effective manner that contributes to the overall IHS Agency mission to provide the highest quality health care to American Indian and Alaska Native recipients.

   Responsible personnel at individual IHS facilities, service units, Area offices and Headquarters all need to know and to apply the three basic steps in the acquisition planning process: (1) identifying a need, (2) scheduling acquisition work, and (3) developing an individual acquisition plan.

   1. Step 1-- Identifying a Need .  The acquisition planning activity, in its truest sense, begins at any time that IHS Agency personnel first identify and begin to justify a need to procure supplies or services.

      In some cases, such as the need for construction or expansion of a health care facility that responds to a steady increase in the service population, the acquisition “need” may emerge over the course of several years or even decades.

      In other cases, such as an emergency requirement for large quantities of pharmaceuticals to treat an epidemic disease, the acquisition “need” may become apparent with only a few days or weeks notice.

      Many IHS acquisition needs reoccur annually with a fair degree of regularity, while others may clearly emerge as new requirements well before the beginning of a new fiscal year.

      In all of these cases, long-range acquisition planning should begin no later than the formulation and submission of the annual IHS budget, a process that starts approximately eighteen months before the beginning of the fiscal year in which the supplies and services will be procured.

      Critically important to all IHS acquisition planning, whether long-range or short-term, is the responsible action of IHS program and contract personnel who identify and justify an acquisition need.  It is through such identification, justification, and estimation of cost that the need can be included within the annual IHS budget to the Congress, can be scheduled under the Annual Acquisition Plan, and can be met during the course of a fiscal year through the use of individual acquisition planning.

      As summarized in the FAR: “Acquisition begins at the point when agency needs are established and includes the description of requirements to satisfy agency needs ... ” [FAR 2.101].

   2. Step 2 -- Scheduling Work.  The funding amounts and conditions in the annual Congressional appropriation for the various activities of the IHS, including procurement, determine the actual dollars that will be available in any fiscal year for the acquisition of supplies and services.

      Once a Congressional appropriation for any fiscal year, and its rate of apportionment by the Office of Management and Budget (OMB) are known, the IHS Annual Acquisition Plan becomes the primary tool to assist IHS program managers in the coordination and scheduling over the course of the fiscal year of various contractual requirements involving program offices and contract offices.

      Development of the Annual Acquisition Plan is thus the second critical step in IHS acquisition planning.  The next subsection examines the intent, scope and content of the Annual Acquisition Plan in greater detail.  In essence, the purpose of proper scheduling within the IHS is ideally to spread out and control the annual acquisition workload throughout the fiscal year, while also remaining cognizant of the fact that not more than 30% of the Agency’s total acquisition appropriation may he obligated in the fourth quarter of any fiscal year.

      Such annual planning also allows-- (1) for a more effective implementation of the requirements of the Buy Indian Act to use Indian-owned business entities as vendors wherever possible; and (2) for the identification of contract opportunities for other small and minority-owned businesses by the Office of Small and Disadvantaged Business Utilization.

      By employing an effective Annual Scheduling process, the following can be avoided, or at least minimized:  (1) hasty, "crisis" driven acquisition decisions; (2) untimely, late procurements that result when personnel are overloaded with priority acquisition work; and (3) the wastefulness and inefficiency that too often characterize "last minute" year-end spending.

   3. Step 3-- Developing an Individual Acquisition Planning Document.  The individual Acquisition Planning Document (APD) is the first basic planning tool used to initiate the actual procurement of needed specific supplies or services for the IHS.

      The individual APD identifies the particular IHS procurement need, the funding source, the probable mode of procurement, and potential vendors capable of meeting the specific requirements of the acquisition, and a number of other important, variable factors.

      Once a particular procurement need is clearly identified, the individual APD should be developed as early as is reasonably possible.  It is the effective use of this third step in the planning process that often has the greatest impact on whether or not a specific acquisition action achieves its goals, especially when the factors of product or service value, price, and timeliness are considered.

      Subsection C provides more policy direction for the development and use of the individual APD.

2. Annual Acquisition Plan.  IHS Awarding Activities Offices must carefully plan their spending and seek to distribute their acquisition workload throughout the entire fiscal year, and adhere to the fourth quarter spending limitation imposed on the IHS.

   Annual acquisition planning helps to balance the procurement workload and avoids awarding too many contracts at the end of the fiscal year:  a spending practice that has too often in the past proved wasteful to Federal agencies, and which, as a result, is the subject of close scrutiny from both the Congress and the OMB.

   1. Federal Regulations.  Federal regulations under Part 7 of the FAR concern acquisition planning in general, and should be read both as background for the development of the Annual Acquisition Plan, and, in particular, as a guide when preparing individual APDs.

      Specific regulations regarding Annual Acquisition Planning {Scheduling) for Agencies within the HHS are found in the HHSAR under Subpart 307.71.  These regulations require operating and staff divisions to coordinate their acquisition actions over an eighteen month period.

      Although the divisions and offices within HHS have flexibility to schedule individual contract actions, the “touchstone” for these regulations is that the annual acquisition workload should be distributed as evenly as possible throughout the fiscal year, taking into account the limitation that is imposed on fourth quarter IHS spending.

   2. Senior CO Responsibilities.  Preparation and maintenance of the Annual Acquisition Plan is the responsibility of the SCO within each IHS Area contracting office, and the Offices of Engineering Services (Regions II, VI and X).

      No later than the first month of each fiscal year, the SCO is to request identification of all requirements that are expected to result in a formal contract award (usually above $25,000).  This identification is to be made for each program that is supported by the contracting office.

      At a minimum, this identification is to include the title of the projected requirement, total estimated costs to be obligated, the date the RFC is expected, and the target award date.

      The Annual Acquisition Plan that is to be developed using this information is to include all new contract requirements for the fiscal year, including anticipated Public Law 93-638 awards, and all modifications over the small purchase limitation to on-going contracts.

      In developing the Annual Acquisition Plan, the SCO allows 30 days for the program to identify acquisition requirements.  As projected requirements are received, the SCO consolidates this information into a single report, which is then maintained, updated and distributed as required to meet Agency goals.  As unforeseen, unplanned RFCs are generated during the course of the fiscal year, the SCO is further responsible for revising the annual plan accordingly.

      Each quarter of the fiscal year, the SCO is to distribute the most up-to-date version of the Annual Acquisition Plan to responsible program managers for their review.  At this time, the program office is to note a brief update on the status of the procurement requirement, and then to return the annotated Plan to the contracting office.

      Upon receipt of such annotated Plan each quarter, the SCO is to review all additions and deletions--paying special attention to the identification of new requirements, to the realism of projected RFC and award dates, to the identification and resolution of problems, and to making required assignments to contract personnel.

      Throughout the course of the fiscal year, the SCO is required to advise program personnel of their need--

      --to ensure that new contracts follow pre-established plans; and,

      --to minimize year-end spending.

      The SCO is also responsible for setting closing dates for the receipt of new RFC purchases from current fiscal year funds, and for expediting the preparation and processing of actions that require higher levels of approval in order that all awards may be made in a timely manner.

   3. Project Officer Responsibilities.  The PO provides primary assistance to the SCO in the development of the Annual Acquisition Plan, and is also central to the development of required Individual Acquisition Plans.

      In effect, the PO takes the lead in doing the basic work that leads to development of both the annual and individual plans.  With respect to the Annual Acquisition Plan, the PO’s responsibilities include preparation of the RFC, advising the SCO of the expected RFC submission date, and informing the SCO responsible for the quarterly update of any expected changes in the RFC or related deadlines.

      When used effectively, the Annual Acquisition Plan for each IHS Area becomes an excellent tool for facilitating communication and cooperation between contract specialists and programmatic functional managers.  The result is not only more efficient and more cost-effective achievement of IHS program goals, but also, and ultimately, the enhanced delivery of timely, quality health care to thousands of individual American Indian and Alaska Native children and adults.

3. Individual Acquisition Planning Document.  The Individual Acquisition Plan is an effective administrative tool that helps both the CO and the PO address the necessary requirements and timeliness to complete a particular IHS acquisition activity.

   Within the HHS, the Individual Acquisition Plan is actually accomplished through use of an instrument termed the “Acquisition Planning Document” (APD).

   The APD serves as an advance agreement between Agency program and contracting personnel, outlining the methods of how and when an acquisition is to be accomplished.

   Primary purposes of the APD include promoting competition as well as identifying and resolving problems early in the acquisition cycle, thereby precluding delays in contract placement and performance.  In general, the APD is developed prior to the preparation and submission of the formal RFC.

   1. Federal Regulations.  In preparing APDs, the CO and the PO are to adhere to the requirements and guidance provided under Part 7 of the FAR, and Subpart 307.1 of the HHSAR.

      Although the HHS does not prescribe a standard format for the APD, the HHSAR under Subpart 307.105-1 describes key elements that must be addressed in each Agency’s APD, while Subpart 307.105-2 describes special program clearances and approvals.  HHSAR 307.104-1 gives the PORA authority to prescribe additional acquisition planning procedures.

      Within the IHS, APDs are required for the following types of acquisitions:

      1. Negotiated acquisitions over the small purchase limitation.
      2. All Two-step sealed bid acquisitions expected to exceed the small purchase limitation.
      3. All Sealed bid acquisitions, regardless of dollar value.
      4. Construction services of any amount, including any construction under the self-determination authority of Public Law 93-638.

      APD’s are NOT required for the following types of acquisition contracts:

      1. Architectural and Engineering services.
      2. Utility services available from only one source.
      3. Acquisitions made from or through other Government agencies.
      4. Negotiated, non-procurement, non-construction acquisitions made pursuant to P.L. 93-638.
      5. Contract modifications that either exercise an option or add funds to an incrementally funded contract, provided an approved APD is in place and there is no significant deviation from this plan.

      Exhibit 5-5.5-A prescribes the acquisition plan format that is to be used for all acquisitions.  (Additional lines may be added to this format, when necessary, and milestones may also be added to the acquisition planning schedule, if required.)

   2. Responsibility for the APD.  Within the IHS, preparation of the APD is the joint responsibility of the CO and the PO, but also may include such other IHS personnel as the PORA may prescribe.

      In actual practice, the PO often assumes a lead role in developing an APD, while coordinating such development with the CO.  Project Officer responsibilities also include finalizing the Statement of Work (SOW); preliminary development of the RFC, including required cost-estimates and delivery requirements; requesting the necessary funds; suggesting vendor sources; determining criteria for evaluation; obtaining required clearances; and submitting the completed RFC to the Contract Office.

      CO responsibilities for an APD include discussion of work requirements with the PO; preliminary review of the developing RFC for scope and clarity; development of a contract schedule that will meet the required award deadline; determining the type of contract that is most appropriate based on the specifications or SOW; and the assignment of any required contract specialists to assist the PO.

      Effective with the publication of this IHM Chapter, the CO is required to notify the PO of expiring contracts 180 days prior to the date of expiration, and to request that the PO initiate any appropriate planning documents that may be required for renewal.  Notwithstanding this notification, the PO remains responsible for actually initiating the renewal APD and RFC.

      Management personnel within the appropriate IHS Headquarters or Awarding Office have the responsibility to assist the CO and PO with the development of the project concept; to assist in coordination with other Program and Tribal Officials when necessary; to aid in the development of the APD and RFC specifications and definition of the scope of work; to help determine the availability of funds as well as the optimum time of contract award; to initiate review and approval of any special requirements (such as those for procurement of Automatic Data Processing or Telecommunications equipment) and to participate in the recommendation of a PO.

      Depending on the nature and dollar value of the contract, final review responsibility for the APD will occur either at the Awarding Office or Headquarters level.  The reviewer’s responsibilities include APD approval, disapproval, or clarification, if necessary; assurance that necessary clearance requirements are initiated; assurance that final approval or disapproval by the PO was obtained; and verification that the APD is in compliance with Headquarters overall acquisition plans.

   3. Approval of the APD.

      Within the IHS, the appropriate signature level of the Approving Official depends on the total cost of the acquisition as follows:  (a) planning documents for contracts between $25,000 and $1,000,000 are to be approved by the CO; (b) planning documents for contracts over $1,000,000 are to be approved by the PORA, or someone who is designated by the PORA, provided that such designee is in a position no lower than the next level above the responsible CO.

4. Summary.  IHS acquisition of supplies and services, and the IHS acquisition planning that facilitates orderly, timely, and cost-effective procurement, is a team effort requiring the combined efforts, cooperation and coordination of all involved contract, program and review personnel.

   A summary chart that outlines the various steps in the IHS acquisition process follows under Exhibit 5-5.5-B.

5-5.6  BUY INDIAN ACT COMPLIANCE AND CONTRACT FILE REVIEW

1. Overview.  This section addresses Indian Health Service (IHS) policy regarding the procurement of supplies and services under the authority of the Act of June 25, 1910, 25 U.S.C. 47, commonly referred to as the Buy Indian Act.
2. Purpose.  The purpose of this revised section of this chapter is to ensure compliance with the Buy Indian Act (25 U.S.C. § 47), and to ensure that the acquisition actions made to Indian Economic Enterprises (IEE) are maximized to the fullest extent allowed by the Act. Increasing the number of acquisition actions awarded to IEEs will strengthen Indian Health Service commitment to “raise the physical, mental, social and spiritual health of American Indians and Alaska Natives to the highest level” as well as fostering Indian employment and economic development.
3. Scope.  Except as provided in 48 CFR 326.602-2, this policy applies to all acquisition of supplies, services and construction made by or on behalf of IHS above the micro-purchase threshold.
4. Policy.  All acquisitions entered into by IHS shall be made under the Buy Indian Act set-aside authority whenever the use of that authority is authorized and practicable.
5. Authority.
   1. Statutes and Regulations.
      1. 25 U.S.C. §47, Buy Indian Act
      2. 48 CFR Chapter 3, Department of Health and Human Service (HHS) Acquisition Regulations (HHSAR), Part 326 – Other Socioeconomic Programs, Subpart 326.6 – Acquisitions under the Buy Indian Act
      3. 48 CFR Chapter 3, HHS Acquisition Regulations (HHSAR), Subpart 352 – Solicitation Provisions and Contract Clauses
      4. FAR, Part 19 – Small Business Programs
6. Responsibilities.
   1. Head of Contracting Activity (HCA). Oversees the acquisition management programs and ensures that acquisition management has the applicable resources, procedures and tools necessary to fulfill the duties assigned. Responsible for review and decision of all deviations exceeding $13.5 million but not exceeding $68 million.
   2. Director, Division of Acquisition Policy (DAP). Responsible for the implementation of the Buy Indian Act and ensures compliance with all applicable laws, regulations, policies and procedures. The Director, Division of Acquisition Policy (DAP) is responsible for issuing acquisition guidance and ensuring that Acquisition Management Reviews (AMR) are conducted annually. The Director, DAP is responsible for the management of the IHS Buy Indian Act reporting system. The Director, DAP is also responsible for review and decision of all deviations exceeding $25,000 but not exceeding $700,000, absent a Chief Contracting Officer (CCO).
   3. Chief Contracting Officer (CCO). The CCO is lead Supervisory Contract Specialist for their respective Area Office to include the Division of Engineering Services (DES). The CCO is responsible for ensuring that acquisition personnel adhere to this policy and that all Buy Indian Act contracts, deviations and challenges are reported quarterly to the DAP established reporting system and due date. Responsible for review and decision of all deviations exceeding $25,000 but not exceeding $700,000.
   4. Contracting Officer (CO). Responsible for adherence and application of this policy. The Contracting Officer (CO) must also communicate this policy and its implications to the programs they support. Responsible for review and decision of all deviations exceeding the micro-purchase threshold and up to $25,000.
   5. Competition Advocate. Responsible for review and decision of all deviations exceeding $700,000 but not exceeding $13.5 million.
   6. HHS Office of Small & Disadvantaged Business Utilization (OSDBU) Director; Office of the General Counsel (OGC); HHS Department Competition Advocate; and the HHS Senior Procurement Executive (SPE). Responsible for review and decision of all deviations exceeding $68 million.
   7. IHS members of the Senior Executive Service (SES). The IHS members of the Senior Executive Service (SES), who oversee programs supported by contract or contractor, are responsible for adherence and application of this policy.
7. Definitions.
   1. Indian Economic Enterprise (IEE). Any business activity owned by one or more Indians or Indian Tribes that is established for the purpose of profit provided that: the combined Indian or Indian Tribe ownership must constitute not less than 51 percent of the enterprise; the Indians or Indian Tribes must, together, receive at least a majority of the earnings from the contract; and the management and daily business operations of an enterprise must be controlled by one or more individuals who are Indians. To ensure actual control over the enterprise, the individuals must possess requisite management or technical capabilities directly related to the primary industry in which the enterprise conducts business. The enterprise must meet these requirements throughout the following time periods:
      1. At the time an offer is made in response to a written solicitation;
      2. At the time of the contract award; and
      3. During the full term of the contract.
   2. Indian Small Business Economic Enterprise (ISBEE). An IEE that is also a small business concern established in accordance with the criteria and size standards of 13 CFR part 121.
8. Deviations.There are certain instances where the application of the Buy Indian Act to an acquisition may not be appropriate. In these instances, the CO must detail the reasons in writing or via email and make a deviation determination. Any deviation must be approved by the authorized approving official specified in HHSAR 326.603-3 and documented in the contract file, except as provided in HHSAR 326.603-3(b).

   Documentation shall be made using the “Memorandum to the Contract File, Approved Deviation from the Buy Indian Act.” For all deviations, authorized documentation is required and must be supported by verifiable evidence (e.g., market research, sources sought notice, statutory authority, etc.).

   Approval and signature(s) authorization must be obtained by the official next-in-line before submission to the authorized official for approval. For example, a deviation for an acquisition requiring HCA review, must first be approved by the CO, Area CCO (or Director, DAP) and IHS Competition Advocate. All approvals to the IHS Competition Advocate and/or HCA, shall be submitted by the responsible CCO. All approvals requiring HHS approval shall be submitted through the Director, DAP or HCA.

9. Reporting and Compliance Review Requirements.
   1. Reporting of Deviations and Challenges will facilitate IHS efforts to monitor compliance with the Buy Indian Act. The CCOs shall manage and ensure all responsible deviations and challenges are uploaded and reported to the IHS Buy Indian Act reporting system by the 15th of the subsequent month of each fiscal year quarter (i.e. October 15th, for the previous fiscal year quarter ending on September 30th).

      Both deviation and challenge reports will be compiled each fiscal year and presented to the IHS Office of the Director, the HHS OSDBU and the HHS SPE.

      All Contracting Officers shall ensure IHS commercial contracts awards set-aside under the Buy Indian Act are accurately reported in the Federal Procurement Data System – Next Generation (FPDS-NG).

   2. The IHS will conduct annual AMRs that incorporate the Buy Indian Act into the HHS mandated annual testing of internal controls. The AMRs are conducted annually to evaluate the effectiveness and efficiency of the contracting office under review and provide suggestions to improve any noted weaknesses or deficiencies. For each acquisition case file tested for internal controls, the compliance review will be conducted under the Buy Indian Act using the current fiscal year AMR rating elements.

      All contracts selected for annual internal control review are tested for compliance with the Buy Indian Act award and exception procedures. Any findings resulting from the AMR will be discussed with the CCO, along with the Area Executive Officer and/or the Area Director. A compilation of the findings for the year will be reported to the HCA, the Deputy Director for Management Operations (DDMO) and the IHS Office of the Director.

10. Buy Indian Act Training. The IHS, on an annual basis, will conduct and make available to its employees, acquisition training in support of the procurement of supplies and services under the authority of the Buy Indian Act.

5-5.7  PROCUREMENT CONTRACTS--GENERAL.

1. Overview.  Procurement contracting is the principal way that the IHS acquires the supplies and services it needs to meet its objectives and perform its mission.

   IHS procurement contracting procedures can be used to acquire supplies and services that range from under a dollar to millions of dollars in value.  In practice, however, IHS and other Federal Agency acquisition of supplies and certain services that are under the “small purchase limitation” (currently $25,000 or less in value) use special “small purchase" procurement procedures that are discussed in detail under Section 8 of this Chapter.

   IHS procurement contracts that are above the small purchase limitation are the specific focus of this section.  In addition, several procurement “special situations,” where the dollar value is less than the small purchase limitation, are also governed by the procedures discussed in this section as well as by other special terms and conditions.

   These “special situations” include the acquisition of Architectural and Engineering Services discussed under Section 10 of this Chapter; Construction Contracting discussed under Section 11; Automated Data Processing and Telecommunications Contracting discussed under Section 12; and Contract Health Services referenced under Section 13.

2. General.  A procurement contract is used when the principal purpose of a transaction is to acquire supplies or services by purchase, lease, or barter for the direct benefit or use of the IHS from a non-Federal source, or when the IHS determines in a particular case that the use of a procurement contract is appropriate.

   This Section is primarily concerned with the policies and procedures that govern the use of procurement contracts by the IHS to acquire supplies and services by purchase.  IHS policies and procedures that concern leasing are discussed in detail under Section 18 of this Chapter.

3. Policy.  In general, IHS policy is to use the most efficient and cost-effective procurement, contracting method, and procedures to achieve its acquisition objectives in furtherance of the overall Indian health care mission of the IHS.

   As detailed in Section 3 of this Chapter, the responsibility for conducting an effective and efficient IHS acquisition program proceeds from the Director of the IHS, to the HCA, to the PORA, to the SCO in each of the Awarding Activities Offices.  A part of this overall responsibility entails knowledge and appropriate use of the correct procurement contract procedures by all who are involved with the procurement contract process, including the IHS Project Officer assigned to a particular contract requirement.

   There are two basic methods for awarding Federal contracts:  Sealed bidding and Negotiation.  This Section examines each of these two approaches, including variations within each method, from the IHS policy perspective.  The Section also considers the essential elements of any IHS procurement contract, the issue of selection of a contract type, and certain special considerations in IHS procurement, such as the Buy Indian policy requirements.

4. Types of Contracts.  The IHS utilizes both the Sealed bidding and Two-step sealed bidding methods in its acquisition of supplies and services.  Within these two Sealed bidding methods, only Firm-fixed price and Firm-price with economic price adjustment contracts may be used.  Sealed bidding is discussed in more detail under Subsection L; while Two-step sealed bidding is discussed under Subsection M.

   IHS also uses the Negotiation method in its acquisition of supplies and services.  Under the Negotiation method, there are two general categories of contracts:  Fixed-price contracts and Cost-reimbursement contracts.  Within each of these two general categories of Negotiated contracts, there are a number of different special types.  Subsection N discusses contracting by Negotiation, and includes a list of the various different Fixed-price and Cost-reimbursement contracts that are generally used within the IHS.

5. Determination of Acquisition Method and Selection of Contract Type.  The nature of the procurement (i.e., the determination of exactly what is to be acquired) influences the method and type of contract.  There are many additional factors the CO should consider in selecting and negotiating the contract type.  As summarized from FAR 16.104, such factors include the following:
   1. Price competition.  Normally, effective price competition results in realistic pricing, and a Fixed-price contract is ordinarily in the Government’s interest.
   2. Price analysis.  Price analysis, with or without competition, may provide a basis for selecting the contract type.  The degree to which price analysis can provide a realistic pricing standard should be carefully considered.  (See FAR 15.805-2.)
   3. Cost analysis.  In the absence of effective price competition and if price analysis is not sufficient, the cost estimates of the offeror and the Government provide the bases for negotiating contract pricing arrangements.  It is essential that the uncertainties involved in performance, and their possible impact upon costs be identified and evaluated, so that a contract type that places a reasonable degree of cost responsibility upon the contractor can be negotiated.
   4. Type and complexity of the requirement.  Complex requirements, particularly those unique to the Government, usually result in greater risk assumption by the Government.  This is especially true for complex research and development contracts, when performance uncertainties or the likelihood of changes makes it difficult to estimate performance costs in advance. As a requirement recurs or as quantity production begins, the cost risk should shift to the contractor, and a Fixed-price contract should be considered.
   5. Urgency of the requirement.  If urgency is a primary factor, the Government may choose to assume a greater proportion of risk or it may offer incentives to ensure timely contract performance.
   6. Period of performance or length of production run.  In times of economic uncertainty, contracts extending over a relatively long period may require economic price adjustment terms.
   7. Contractor’s technical capability and financial responsibility.
   8. Adequacy of the contractor’s accounting system.  Before agreeing on a contract type other than Firm-fixed-price, the contracting officer shall ensure that the contractor’s accounting system will permit timely development of all necessary cost data in the form required by the proposed contract type.  This factor may be critical when the contract type requires price revision while performance is in progress, or when a Cost-reimbursement contract is being considered and all current or past experience with the contractor has been on a fixed-price basis.
   9. Concurrent contracts.  If performance under the proposed contract involves concurrent operations under other contracts, the impact of those contracts, including their pricing arrangements, should be considered.
   10. Extent and nature of proposed subcontracting.  If the contractor proposes extensive subcontracting, a contract type reflecting the actual risks to the prime contractor should be selected.
6. Definition of Requirements.
   1. Specifications, Standards, and Purchase Descriptions.  Specifications, standards, and purchase descriptions are used for IHS acquisitions when the nature of the supplies can be clearly specified, or when the required services can be clearly measured.  The FAR, Part 10 prescribes policies and procedures for using specifications, standards, and other purchase descriptions in the acquisition process.

      A “specification” is a description of the technical requirements for a material, a product, or a service that includes criteria for determining whether the requirements are met.  A specification shall state only the Government’s actual minimum needs and be designed to promote full and open competition, with due regard to the nature of the supplies or services to be acquired.

      A “standard” is a document that establishes engineering and technical limitations and applications of items, materials, processes, methods. designs, and engineering practices.  Standards include any related criteria deemed essential to achieve the highest practical degree of uniformity in materials or products, or interchangeability of parts used in those products.  Standards may be used in specifications, invitations for bid, requests for proposals, and contracts.

      A “product description” is the general, generic term for documents used for acquisition and management purposes, such as specifications, standards, voluntary standards, commercial item descriptions, or purchase descriptions.

      A well-written specification clearly communicates technical requirements in language that is precise and unambiguous.  Such clear language must communicate effectively to both technically and non-technically oriented personnel.

      The PO is responsible for the preparation of the specifications, standards, and/or purchase descriptions for each acquisition period.  If the specifications, standards and/or purchase descriptions are long or complex, the PO should discuss it with the CO during the drafting process to make them as clear as possible.

      IHS personnel responsible for writing or approving specifications, standard, and other product descriptions must ensure that such descriptions state a balance between being as exacting and detailed as necessary to ensure that minimum Government requirements are met and at the same time encouraging full and open competition.

      Use of the Sealed-bidding method of acquisition requires well-defined specifications, standards, and/or purchase descriptions.  If the nature of supplies required makes it impossible to clearly define the Government’s need, or if the services required are not clearly measurable and quantified, the Sealed-bidding method of contracting shall not be used.

   2. Statement of Work (SOW).  The SOW is a critical document in the acquisition process.  The SOW does the following:
      1. Describes the work to be performed or the services to be provided;
      2. Defines the responsibilities of the IHS and the contractor, and
      3. Provides an objective measure so that both the IHS and the contractor will know when the work is complete and payment is justified.

   Formats for SOWs vary widely, but they always describe the objective, purpose, nature, and detailed requirements of the work to be performed.

   The PO is responsible for the preparation of the SOW. If the SOW will be long and complex, the PO should discuss it with the CO during the drafting process to make it as clear as possible.

7. Requisition/Request for Contract.
   1. HHS Form 393, Purchase/Service/Stock Requisition, is the official document authorizing the contracting office to initiate a procurement.  The HHS Form 393 must be signed by the requesting and approving officials, and the designated funds certification official, and must provide a detailed description of the required supplies and/or services.  Manual Exhibit 5-5.8-A contains a sample HHS Form 393.

      For all proposed acquisitions greater than the small purchase limitation, the requisitioner prepares a Request for Contract (RFC) that has all of the items listed in HHSAR 315.70.  The requesting official must review the RFC with the CO, or his/her representative prior to submission to ensure that it is complete.

      After a procurement requisition is prepared and approved, contracting personnel should first determine whether the supplies or services can be provided from priority Government sources or preferred sources such as Buy-Indian or through open-market, commercial sources.  Section 8 of this Chapter, which concerns Small Purchases, discusses the issue of vendor sources and priorities for both Government and commercial sources.  Since the same basic vendor sources that are required for Small Purchase acquisitions must also be checked for larger procurement contracts, please refer to Section 8 for this detailed discussion.

   2. Independent Government Cost Estimates.  The PO must prepare a detailed independent Government cost estimate for all requisitions.

      Unit-pricing, pricing by lot, or total pricing may be used when price is controlled by competition for specific off-the-shelf type items or services.  The PO should include an estimate for the supplies or services to be obtained, and a notation as to how the prices are determined.

      A detailed cost estimate is required for all negotiated acquisitions and is preferred for all other types of IHS acquisitions.  An estimate is required for all supplies and services to be obtained through the Negotiated Contract process. This estimate should include the following cost factors:

      1. Labor hours by category;
      2. Travel;
      3. Materials;
      4. Consultants;
      5. Subcontracting;
      6. Overhead;
      7. General and Administrative; and
      8. Fee.

      The PO may seek the advice of contracting and cost advisory personnel in preparing the independent Government cost estimate.

      Government cost estimates are privileged information and may not be disclosed to persons outside the Government or to any person without a compelling reason to know.  The exception is a solicitation for construction, which includes an estimated price range in the solicitation.

   3. Funding Certification.  All requisitions must include a certification of the availability of funds, appropriations, and accounting citations.  The designated funds certification official makes the certification.  If funds are required from a future fiscal year, but are not currently available, then the statement that “this requirement is subject to the availability of funds” must be included in the RFC/Requisition so the contracting office is alerted.

      When funds become available, the requisition must be re-certified by the designated funds certification official.  The vehicle used for such funds re-certification is the HHS Form 393.

      If a contract award has been made subject to the availability of funds, a contract modification must also be issued to incorporate the available funds into the contract.

   4. Approvals and Clearances.  Some acquisitions require special approvals or clearances.  Those that are applicable to a particular requirement must be listed in the RFC under the Section entitled “Special Approvals, Clearances, and Requirements."  Copies of the clearance must be attached to the RFC.  If the approval or clearance has been requested, but not yet obtained, this must be noted in this Section.

      The PO is responsible for obtaining clearances.  If any clearances are required, the process should be started early to avoid any delays in the acquisition cycle.

      Contracting personnel should carefully review the requisition to ensure that all clearances are included.  Unless specifically provided for in the applicable regulations, a solicitation cannot be released without the applicable clearances.

      The special approval or clearances required are listed in HHSAR 307.105-2 or other regulations and directives.  They pertain to the following acquisitions:

      1. Automatic Data Processing;
      2. ADP Systems Security;
      3. Advisory and Assistance Services;
      4. Printing;
      5. Evaluation Contracts;
      6. Commercial Activities;
      7. Paid Advertising;
      8. Fraud, Abuse, and Waste;
      9. Paperwork Reduction Act;
      10. Contracts with current or former Federal Employees;
      11. Classified Contracts;
      12. Publications;
      13. Public Affairs Services;
      14. Audiovisual (Videotape and Motion Picture Production);
      15. Privacy Act;
      16. Foreign Research Contracts;
      17. Human subjects;
      18. Drug use.
8. Contract Options.  A contract option as defined in FAR Subpart 17.2 is a period specified in the contract when a Government agency may elect to purchase additional supplies or services, or may elect to extend the term of the contract.

   A contract with an option provision allows the Government to buy a specified quantity or service, but also preserves the right to later buy additional amounts, or to extend the level of service at a set price during the term of the contract.

   Solicitations must include option provisions and clauses if they are going to be in the contract.  The solicitation must state the basis of evaluation, either excluding or including the option.

   Contracts must specify limits for the purchase of additional supplies or services, or for extending the term of the contract.  The contract must also state when the option may be exercised.  Note, however, that a contract option may only be exercised prior to the current expiration date of the contract.

   The CO must include in the file a justification of the quantities or terms under option, the notification period for exercising the option, and any limitation on the option price(s) under FAR 17.203(g).

   Before exercising an option, the CO must determine in writing that:

   1. The proposal option was originally publicized in the CBD; if not, the option must be readvertised for 30 days prior to its being exercised;
   2. Items or services to be procured meet the terms of the option, and
   3. The requirements of FAR 17.207 and FAR 17.204(e) have been met.
9. Competition/JOFOC’s.  The basic policy of the Federal Government is to promote and provide for full and open competition in soliciting offers and awarding of contracts.  Limited exceptions to this policy are allowed.  The CO must follow carefully the procedures in FAR Subpart 6.3 concerning when it is necessary to limit competition, and shall include all elements required under FAR 6.303-2.

   If a program office needs to obtain supplies or services by contract without full and open competition, it must give the CO a justification explaining why competition is not feasible, as required by FAR Part 6.  For proposed procurements over the small purchase limitation, the program office must prepare a document titled “Justification for Other than Full and Open Competition” (JOFOC).  This document must fully describe what is to be acquired and explain why it is not feasible to obtain competition.  The JOFOC must also include evidence that the requirement has been synopsized in the CBD and the results thereof clearly stated.

   Each JOFOC must end with at least the following signatory lines (other concurrence lines may be added as necessary):

   Recommended, Project Officer _______________ Date_______

   Concur, Project Officer's Immediate Supervisor___________________ Date________

   Concur, Program Director________________ Date________

   Concur, Contracting Officer________________ Date________

   Approved, Approving Official________________ Date________

10. Approval Levels for JOFOCs.

    Within the IHS, approval levels for JOFOC's are as follows:

    1. Up to $50,000 = SCO
    2. $50,001 to $100,000 = PORA
    3. $100,001 to $1,000,000 = IHS Competition Advocate
    4. $1,000,001 to $10,000,000 = Director, Office of Management, PHS
    5. $10,000,001 and over = Assistant Secretary for Management and Budget, HHS
11. Synopsis in Commerce Business Daily.  Prior to release of a solicitation for a specific contract, the CO is required by FAR 5.2 to publicize the contract in the Commerce Business Daily (CBD) for all proposed acquisitions over the small purchase limitation.  Publication is not required when the CO determines in writing, on a case-by-case basis, that one of the exceptions in FAR 5.202(a) is applicable.  The transmittal of the synopsis to the CBD requires 6 to 10 days.

    When a CBD notice is required, the notice must be published at least 15 days before issuing a solicitation.  Agencies must allow at least 30 days for response to a solicitation.  A copy of the request for CBD synopsis and a copy of the CBD synopsis itself must be placed in the contract file.

    FAR 5.207 requires agencies to use a standard format for transmitting synopses to the CBD.

12. Sealed Bidding.  Sealed bidding is a contracting method that uses competitive bids and public opening of bids.  The procedures for the use of “Sealed bidding” are prescribed under FAR, Part 14.

    FAR 14.103-1 requires that Sealed bidding be used whenever the conditions in FAR 6.401(a) exist.

    These conditions are:

    1. Time permits the solicitation, submission, and evaluation of Sealed bids;
    2. The award will be made on price and other price-related factors;
    3. It is not necessary to conduct discussions with the responding offerors about their bids; and
    4. There is reasonable expectation of receiving more than one Sealed bid.

    Under FAR 14.104, only two contract types may be used in Sealed bidding:

    1. Firm-fixed price, and
    2. Fixed-price with economic price adjustment.

    Firm-fixed price contracts are described under the FAR, Subpart 16.202, and Fixed-price with economic price adjustment contracts are described under the FAR, Subpart 16.203.

13. Two-Step Sealed Bidding.  Two-step sealed bidding is an acquisition method used to obtain competitive bids when the available specifications or other documentation describing the Government’s requirements are not adequate for a normal Sealed bid procedure.  Generally, Two-step sealed bidding is used in the purchase of complex items that requires both submission of technical proposals and the use of Sealed bids.

    Two-step sealed bidding may be used when all of the following conditions are present:

    1. Available specifications or purchase descriptions are not definite or complete, or may be too restrictive without technical evaluation and discussion;
    2. Definite criteria exist for evaluating technical proposals;
    3. More than one technically qualified source is expected to be available;
    4. Sufficient time will be available for use of the two-step method; and
    5. A Firm-fixed price contract or a Fixed-price contract with economic price adjustment will be used.

    Step 1:  The first step in the Two-step sealed bidding process involves issuing a Request for Technical Proposals (RTP).  The request is announced in the CBD and requires that the offeror submit only technical information.  No price estimates are required. All proposals are evaluated against a set of established criteria and determined to be acceptable, reasonably susceptible to being made acceptable, or unacceptable.

    After the initial evaluation of offeror responses, clarifying information may be requested, and proposals are re-evaluated and determined to be acceptable or unacceptable.

    Step 2:  The second step consists of a formal sealed bidding process.  It is limited to only those sources whose technical proposals were determined to be acceptable in the first step.  Each offeror submits a bid based on its own acceptable technical proposal, and the award is made to the lowest responsible and responsive bidder.

    This part of the acquisition is not to be publicly posted nor synopsized in the CBD as an acquisition.  However, the names of firms that have submitted acceptable proposals will be publicized in the CBD for the benefit of prospective subcontractors.

    FAR Subpart 14.5 contains the guidelines and procedures for the use of the Two-step sealed bidding procedure.

14. Negotiation.   FAR 15.101 defines “negotiation” as contracting through competitive or other-than-competitive proposals and discussions.  Any contract that is awarded without using Sealed bidding procedures is a Negotiated contract.

    If Negotiation is to be used rather than Sealed bidding, the CO must document in writing which of the four conditions under the preceding Subsection L have not been met, and this determination must be included in the contract file (except in the case of Architectural and Engineering (A&E) contracting).  This determination should be included as part of the summary of negotiation; however, if a presolicitation review by IHS Headquarters is required, the determination should be documented in a separate memorandum.

    Once proposals are received, the negotiation process allows bargaining and usually lets an offeror revise its offer before awarding a contract.  Bargaining is defined as discussions, persuasion, attention to initial assumptions and positions, and give-and-take.  Negotiations may apply to price, schedule, technical requirements, type of contract, or terms of a proposed contract.

    Negotiation, unlike Sealed bidding, is relatively flexible.  This flexibility provides the following advantages:

    1. Allows consideration of a proposal that is reasonably susceptible to being made acceptable;
    2. Promotes discussions;
    3. Encourages innovation;
    4. Allows flexible use of contract arrangements;
    5. Permits factors other than price to be considered in determining who receives contract awards, and
    6. Provides the opportunity to examine the contractor’s estimated costs.

    This flexibility may also create problems and increase the work for contracting and program personnel.  The following problems may occur:

    1. Pricing may be more difficult.  Depending on the complexity and cost of the procurement, considerable time and effort may be involved.  Cost analysis, price analysis, and/or price audits may be required that involve cost analysts or audit personnel.
    2. Additional demands may be placed on the CO and PO.  Extensive reviews and negotiations may be involved.  The process requires extensive documentation to justify IHS actions and decisions.
    3. More time may be required.  The negotiation process can be lengthy, depending on the dollar amount of the project, complexity, and number of offerors involved.

    In contracting by Negotiation, both Fixed-price contracts and Cost-reimbursement contracts may be used.

    The range of potential Fixed-price contracts generally used within the IHS includes:

    1. Firm-fixed-price contracts, described in FAR 16.202;
    2. Fixed-price contracts with economic price adjustment, described in FAR 16.203;
    3. Fixed-price incentive contracts, described in FAR 16.204;
    4. Firm-fixed-price, level-of-effort term contracts, described in FAR 16.207;
    5. Fixed-price requirement contracts, described in FAR 16.503;
    6. Fixed-price indefinite-delivery contracts, described in FAR 16.501;
    7. Fixed-price time-and-materials contracts, described in FAR 16.601;
    8. Fixed-price labor-hour contracts, described in FAR 16.602.

    The range of potential Cost-reimbursement contracts generally used within the IHS includes:

    1. Cost-contracts, described in FAR 16.302;
    2. Cost-sharing contracts, described in FAR 16.303 and HHSAR 316.303;
    3. Cost-plus-incentive fee contracts, described in FAR 16.304;
    4. Cost-plus-award fee contracts, described in FAR 16.305;
    5. Cost-plus-fixed-fee contracts, described in FAR 16.306 and HHSAR 316.306.

    FAR 16.103 indicates a preference for use of a Firm-fixed-price contract whenever possible, although Cost-reimbursement contracts often must be used.  For contracts of relatively low dollar values, Firm-fixed-price contracts should be used, if possible.

    A chart comparing the Sealed bidding and Negotiated contracting methods is provided under Exhibit 5-5.7-B, with a more detailed overview of each of these respective contract methods provided under Exhibit 5-5.7-C and Exhibit 5-5.7-D.

    Other types of contracts that may be used less frequently within the IHS include:  Incentive contracts described in FAR 16.4; and Letter contracts, described in FAR 16.603 and further discussed in the Subsection that follows.

15. Letter Contracts.  A Letter contract, as defined by FAR Subpart 16.603-1, is a preliminary contractual instrument that authorizes the contractor to begin immediately manufacturing supplies or performing services.

    A letter contract may only be used when:

    1. The Government’s interests demand that the contractor be given a binding commitment so that work can start immediately; and
    2. Negotiation of a definitive contract is not possible in sufficient time to meet the requirement.

    Since a Letter contract is not a preferred contract instrument for use within the Federal Government, it is HHS policy to refrain from issuing Letter contracts.  HHSAR Subpart 316.603 states that exceptions to this policy will be permitted only in cases where HHS and the contractor agree on all substantive matters (e.g., statements of work, delivery schedules, and general and special clauses).

    The IHS PORA must approve all Letter contracts and their amendments.  The CO must make a written determination that a letter contract (or amendment) is required.  The letter is sent to the PORA with a memorandum that includes the information listed in HHSAR Subpart 316.603.70.

16. Cost and Pricing Data.  Under FAR 15.804.2, certified cost or pricing data is required before awarding a negotiated contract expected to be over $100,000.  FAR 15.803-3 allows exceptions to this requirement if one of the following conditions is met:
    1. Prices are based on adequate price competition.  This exists if offers are solicited, two or more responsible offerors submit responsive offers, and these offerors compete independently;
    2. Prices are established by catalog or market price of commercial items sold in substantial quantities to the public; or
    3. Prices are set by law or regulation.

    When certified cost or pricing data are required, the contractor must complete a Certificate of Current Cost or Pricing Data and give it to the CO as soon as practicable after price agreement is reached.  This certificate is included in the contract file.  The format for the certificate is included in FAR 15.804-4.

17. Technical Evaluation.  The technical evaluation process is a critical element in negotiated procurement.  The evaluation is conducted by program personnel selected to serve on a Technical Evaluation Panel.  This process requires:
    1. Review of all proposals;
    2. Scoring of proposals;
    3. Determination of acceptable and unacceptable proposals;
    4. Ranking of proposals; and
    5. Technical Evaluation Report of the technical proposals submitted by offerors which includes identification of the strengths and weaknesses of each offeror.

    A technical evaluation panel is required for all negotiated acquisitions expected to exceed $300,000.

    If negotiated acquisitions are under $300,000 but are complex, the CO may decide to have a technical evaluation panel, even though one is not required by regulation.  For all other acquisitions under $300,000, the PO may serve as the technical evaluator.

    The technical evaluation panel shall be composed of three to five persons, and may include the PO as a voting member who may also serve as the chairperson at the discretion of the CO.  Under the HHSAR, fifty percent of such panel must have successfully completed the DHHS PO training course.  Under HHSAR 315.608-74, the CO must attend the initial meeting of the panel and explain the rules for conducting the evaluation.  Written guidance shall be given to the panel if the CO is unable to attend the initial meeting.  The CO is strongly encouraged to have a representative present at all panel meetings.

    Each evaluator must read each proposal, describe its strengths and weaknesses, and score the proposal.  Evaluators use rating sheets developed in the technical plan or those approved by the CO.  After the evaluators have discussed the scores, strengths, and weaknesses of each proposal, the panel will rank the proposals.  The technical evaluation panel chairperson must ensure that numerical scores are consistent with the strengths and weaknesses identified.

    Each proposal must be specifically identified as acceptable or unacceptable.  Predetermined cutoff scores cannot be used.

    The panel chairperson must submit a technical evaluation report to the CO.  The report shall show each evaluator’s score for every element evaluated for each proposal.  It must also include a narrative evaluation of the strengths and weaknesses of each proposal.  Copies of the scoring sheets must be included with the report.  The panel should include any concerns or items that should be addressed in future negotiations (if any) with the offerors.

    The CO reviews the report to be sure it is complete and accurate.  It is especially important that the comments support the scores.  If there are inconsistencies between the narrative and scores (i.e., high score--few strengths or low score--many strengths), the report shall be immediately returned to the panel for correction.

18. Competitive Range.  The technical evaluation panel chairperson is responsible for ensuring that the panel’s report supports the numerical rating and ranking, and that the scores are consistent with the strengths and weaknesses identified for each proposal reviewed.  This report serves as the basis for the CO to establish the competitive range and is used in debriefings.  It also may become a critical document in the event of a protest action.

    In accordance with FAR 15.609 and HHSAR 315.609, the CO shall determine which proposals are in the competitive range for the purpose of conducting written or oral discussion.

    All determinations regarding the inclusion or exclusion of proposals in the competitive range must be completely documented, including the salient reasons for the determinations.

19. Prenegotiation Objectives.  FAR 15.807 requires the CO to establish prenegotiation objectives before the negotiation of any pricing action conducted in the acquisition process.  These objectives assist the CO in judging the overall reasonableness of proposed costs and in negotiating a fair and reasonable price.

    Prenegotiation objectives shall be established in writing and signed by the CO prior to commencement of negotiations and shall be retained in the contract file. These objectives shall be detailed and shall address all pertinent issues, including all cost and fee objectives.

20. Negotiations.  The CO shall conduct written or oral discussions with all responsible offerors within the competitive range in accordance with FAR 15.610 and HHSAR 315.610.  Discussions must be “meaningful,” i.e. not merely perfunctory, and shall address all weaknesses identified as a result of the technical evaluation, as well as any other questions concerning the offerors’ technical and business proposals.

    At the conclusion of negotiations, all offerors shall be afforded an opportunity to submit a “best and final offer” (BAFO) in accordance with FAR 15.611 which permits the offerors to revise or make any desired improvements in their proposals.  A common cut-off date shall be established for the submission of BAFOs by all offerors.

    Following receipt of BAFOs, a final evaluation of cost, technical, and other salient factors shall be performed in accordance with HHSAR 315.611(c).

21. Responsiveness Versus Responsibility.  It is important to distinguish responsiveness from responsibility.  The apparent responsiveness of the bid is ascertained from the bid itself, not from extrinsic evidence or other information furnished by the contractor.

    In contrast, responsibility focuses on the bidder’s ability to perform as promised.  This involves, in part, a determination of the bidder’s capacity, credit, experience, integrity, past performance, and overall ability to perform.

    The CO determines whether a bid is responsive to the solicitation.  The bidder, however, can protest such determinations to the agency or to the GAO.

22. Responsible Contractors.  The CO is responsible for making a determination of responsibility of a prospective contractor in accordance with FAR, Part 9.  To be determined responsible, a prospective contractor must--
    1. Have adequate financial resources to perform the contract, or the ability to obtain them (FAR 9.104-3(b));
    2. Be able to comply with the required or proposed delivery or performance schedule, taking into consideration all existing commercial and governmental business commitments;
    3. Have a satisfactory performance record (FAR 9.104-3(c));
    4. Have a satisfactory record of integrity and business ethics;
    5. Have the necessary organization, experience, accounting and operational controls, and technical skills, or the ability to obtain them (including, as appropriate, such elements as production control procedures, property control systems, quality assurance measures, and safety programs applicable to materials to be produced or services to be performed by the prospective contractor and subcontractors).  (FAR 9.104-3(b).
    6. Have the necessary production. construction, and technical equipment and facilities, or the ability to obtain them (FAR 9.104-3(b); and
    7. Be otherwise qualified and eligible to receive an award under applicable laws and regulations.

    The CO by signing a contract determines that the prospective contractor is responsible with respect to that contract.  However, a determination of responsibility shall be documented in writing, in accordance with FAR 9.103(b) and HHSAR 315.672(b)(2), either as a separate document, or included as part of the summary of negotiations.  If the CO determines the prospective contractor (other than a small business firm) is non-responsible he shall document the basis and place it in the contract file.

    If the CO determines that a small business firm is not responsible, the CO shall refer the matter to the appropriate Small Business Administration (SBA) office for a final responsibility determination. In the event the SBA determines the contractor to be responsible, the SBA shall furnish the CO with a certificate of competency. In the event that the SBA determines that the contractor is not responsible, then the CO determination shall stand.

23. Preaward Site Visit.  Before awarding a contract, there may be cases where a preaward site visit is required to determine the acceptability of facilities, laboratories, etc. as part of a responsibilities determination.
24. Summary of Negotiations.  After negotiations, the contract negotiator prepares a negotiation memorandum covering all the items specified in HHSAR 315.672.  The memorandum must be signed by the negotiator.

    The memorandum should be prepared with care and with attention to detail.  It serves as a record of the entire process for an individual acquisition.  It should have enough detail so that the reader of the document can understand the events of the procurement and the decisions made.  It will be read by those approving the contract and will be a reference document in the event of protests or disputes.

25. Contract Award.  Before awarding the contract, the CO must review the contract document and file to be certain that all requirements are met and that the file is fully documented.

    All IHS contracts over designated thresholds contained in Exhibit 5.5-7-A must be submitted to the PORA, DCGP prior to award. Proposed awards must be submitted to DCGP for review no later than fifteen days prior to the expected award date, unless the CO justifies the need and arranges for an expedited review by the DCGP.

26. Post Award Guidance.  Section 17 of this Chapter provides an overview of the post-award period, including a discussion of procurement contract administration, maintenance of the award files, and contract closeout.
27. Procurement Reviews.
    1. Purpose.  This Subsection prescribes the policy, responsibilities, and procedures to be used in conducting IHS Self-Assessment and Management Control Reviews.
    2. Background.  The PHS, Division of Grants and Contracts, performs Procurement System Reviews of all Contracting Offices under the PHS.  These reviews are performed every five years.  The IHS Self-Assessment and Management Control reviews are intended to supplement these PHS reviews.
    3. Policy.  It is IHS policy that the Procurement Review Guide (June 1993) developed by the Logistics Management Institute, as revised by the HHS, PHS will be used by all IHS personnel performing Self-Assessment and Management Control Reviews.
    4. Procedures.  The Procurement Review Guide, currently used throughout the HHS, will also be used in the IHS reviews in an effort to maintain consistency, prepare for the PHS reviews, identify areas of expertise, and serve as a means of comparing the procurement capabilities of IHS Area offices.
       1. Self-Assessment Reviews.  The Area Senior Contracting Officer at each of the IHS Area offices will ensure that Self-Assessment Reviews are conducted on all IHS procurements.
       2. Management Control Reviews.  The Director, DCGP, IHS, will ensure that IHS Management Control Reviews are conducted at least every three years at all IHS contracting offices.  The Management Control Reviews will be conducted by teams composed of DCGP Procurement Analysts, Area office personnel with required expertise, and/or any other individuals deemed appropriate by the DCGP Director.
28. Unsolicited Proposals
    1. Purpose.  This section establishes the IHS policy for acceptance and evaluation of unsolicited proposals.  It supplements the guidance provided in the Federal Acquisition Regulation (FAR) 15.5 and Health and Human Services Acquisition Regulation (HHSAR) 315.5.
    2. Background.  Section 15.506(a) of the FAR requires agencies to establish procedures for controlling the receipt, evaluation, and timely disposition of unsolicited proposals.  Section 315.506(a) of the HHSAR designates the Principal Official Responsible for Acquisition (PORA) as the individual responsible for establishing the procedures.
    3. Policy.  The policy of the IHS is to foster and encourage the submission of unsolicited proposals.  Unsolicited proposals are a valuable means by which unique or innovative methods or approaches that originated or were developed by private and other public sector organizations can be made available for use by the IHS in accomplishing its mission.  An unsolicited proposal is not an advance proposal for a known agency requirement that can be acquired by competitive methods.
    4. Procedures.
       1. The Division of Contracts and Grants Policy (DCGP) is designated as the IHS Coordinating Office as defined in FAR 15.501.  The PORA or his/her designee is the IHS point of contact for receipt and handling of unsolicited proposals.
       2. Area Senior Contracting Officers must designate an individual within the respective Area office to be the IHS point of contact for receiving and handling unsolicited proposals within the Area.  The Area point of contact must maintain a list of all unsolicited proposals that are received in the Area office.  The format for this list is in Exhibit E.
       3. All inquiries for information on the procedures for unsolicited proposals must be directed to the Area point of contact.  The Area point of contact must inform potential offerors of:
          1. The requirements of FAR 15.504.
          2. Necessary contents of unsolicited proposals as outlined in FAR 15.505(d).
          3. The Government's process of handling information that the offeror does not want disclosed for any purpose other than evaluation, and provide the offeror with a copy of the restrictive legend in FAR 15.509(a).  Offerors will be advised that this legend must be on the title page of the proposal and that each restricted sheet in the proposal must be identified as indicated in FAR 15.509(b).  A sample legend is in Exhibit F.

             Offerors must be advised that in the event none of the information in the proposal is restricted, a written statement must be provided by the offeror that indicates he/she does not wish to impose any restrictions on the information included in the proposal.

          4. Explain the requirement in HHSAR 315.505(d) for the offeror to complete an Unsolicited Proposal Certification By Offeror to ensure against contacts with Government personnel that would result in an unfair advantage to the offeror.  Offerors must be provided a copy of the certification.  Exhibit G is a sample certification document.
          5. Direct the contractor to submit (a) the proposal (original + 2 copies), (b) the completed certification, and (c) either the restrictive legend or a statement that cites there are no restrictions on the proposal content, to the appropriate IHS Area point of contact.
       4. Upon receipt of an unsolicited proposal the Area point of contact must:
          1. Assign a control number and enter the unsolicited proposal into the control log.
          2. Review the proposal to determine if it contains sufficient technical and cost information.
          3. Ensure that the proposal has been approved and submitted by a responsible official or other representative authorized to contractually obligate the offeror.
          4. Ensure the offeror has complied with the marking requirements of FAR 15.509 or submitted a statement waiving restriction.
          5. Ensure the offeror has completed the "Unsolicited Proposal Certification By Offeror" from.
          6. Ensure that offerors are notified in writing of receipt and acceptance of proposals that meet the above requirements.  A sample acknowledgement letter is provided in Exhibit H.
          7. When a proposal does not contain information sufficient to meet the requirements for acceptance, the Area point of contact must provide the offeror an opportunity to submit the required data.
       5. Acceptable proposals must be considered in an objective and timely manner.
          1. The Area point of contact must place a cover sheet on each copy of the proposal that contains restrictive data (see Exhibit I).
          2. The proposal copies must be distributed to appropriate IHS staff for a comprehensive evaluation as described in FAR 15.506-2.  Proposal evaluators must submit their comments and recommendations to the Area point of contact in writing.  A sample request for proposal evaluation is provided in Exhibit J.
       6. Copies of all proposals received and evaluated at the Area office level must be forwarded to the PORA in DCGP.  The Area point of contact must ensure that the following documents are included in the transmittal to the PORA:
          1. A copy of the offeror's proposal and certification.
          2. Documentation indicating that the offeror was provided the advance guidance outlined in paragraph 4c above, and that the initial review required by paragraph 4d. above was accomplished.
          3. A copy of all comments and recommendations made by IHS staff during the comprehensive evaluation required by paragraph 4e.
          4. A written recommendation for disposition of the proposal from the Area Senior Contracting Officer.
             1. A favorable recommendation must be accompanied by a Justification for other than Full and Open Competition (JOFOC).
             2. Unfavorable recommendations must include a "draft" rejection letter from the Area Senior Contracting Officer to the offeror.
       7. The PORA will direct a review of the documentation and ensure that the Area point of contact is provided one of the following decisions:
          1. Concurrence with the Area Senior Contracting Officer's decision by the PORA to reject the proposal and approve the "draft" letter for release to the offeror with or without revision.
          2. Concurrence with the Area Senior Contracting Officer's decision to proceed with a contract and advise the Area Senior Contracting Officer to synopsize the requirement.  Approval of the JOFOC must be in accordance with agency procedures.
          3. When the result of the PORA directed review is nonconcurrence with the recommendation made by the Area Senior Contracting Officer the PORA will discuss the proposal with the Area Senior Contracting Officer and staff in the IHS Coordinating Office to reach a consensus.
       8. Copies of all unsolicited proposals received at the IHS Coordinating Office will be forwarded to the Small and Disadvantaged Business Utilization Specialist (SADBUS) for informational purposes.  This is to ensure that the SADBUS updates his/her source list of small business, small-disadvantaged businesses, woman-owned businesses, and labor surplus area concerns.
    5. In the event that an unsolicited proposal involves an IHS-wide procurement, the responsible Area Office, determined by the address of the offeror, will perform the functions outlined in this section.  When it is determined that a contract can be awarded on an unsolicited proposal, all documentation required for a national contract award will be forwarded to the DCGP.
29. Personal Services Contracts
    1. Purpose.  This section establishes the IHS policy and procedures for the acquisition of medical and professional services, to include experts and consultants.  This policy applies to contracts awarded for personal services with either individuals or organizations for the provision of services in facilities owned, operated, or constructed under the jurisdiction of the IHS.  This supplements the general policy and procedures prescribed in the Federal Acquisition Regulation (FAR) Subpart 37.1 and Health and Human Services Acquisition Regulation (HHSAR) Subpart 337.1.
    2. Background.  The FAR Subpart 37.104(b) states that agencies must not award personal services contracts unless specifically authorized by statute to do so.
       1. The statutory authority for IHS to enter into personal services contracts for the provision of services in facilities owned, operated, or constructed under the jurisdiction of the IHS is P. L. 103-332, Department of the Interior and Related Agencies Appropriation Act, Title II, September 30, 1994, 108 Stat. 2530, as implemented by 25 U.S.C. 1638c.
       2. The administrative provisions of P.L. 103-332, as implemented by 5 U.S.C. 3109, provide IHS with the authority to enter into contracts for the temporary or intermittent provision of expert and consultant services.  The rates of the contract are not to exceed the per diem rate equivalent to the maximum rate payable for senior-level positions.
    3. Policy.  Beginning in FY 1995, it is the policy of the Department of Health and Human Services that when resources are not sufficient to support the mission of the agency, personal services contracts authorized by the administrative provisions of P.L. 103-332 may be executed.
       1. As defined by the FAR 37.101, a personal services contract is a contract that, by its expressed terms, or as administered, makes the contractor's personnel appear to be Government employees.  This is characterized by the employee-employer relationship created between the Government and the contractor's personnel.  The descriptive elements used in assessing whether or not a proposed contract is personal in nature are provided in the FAR Subpart 37.1.
       2. It is the purpose of personal services contracts to: (1) facilitate accomplishment of the IHS mission; (2) maximize beneficiary access to IHS facilities; (3) enhance quality of care by promoting the continuity of the patient/provider relationship; and (4) ensure adequate services for facilities under construction.
       3. The following may be used as a guide in determining which personal services statutory authority is appropriate: (1) when qualified career employees cannot be hired; (2) during times of increased cyclical or seasonal workload; (3) when the workload is variable or does not conform to the standard workweek; (4) during the extended absence of an IHS employee; (5) to accomplish a project or function that has a specified termination date; and (6) to accomplish a project or function that has limited and/or reimbursable funds, e.g., Medicare, Medicaid, private insurance, and research grants.
    4. Requirements.
       1. Personal services contracts are not to be used to circumvent civil service hiring practices or to displace a current permanent Federal employee.
          1. The acquisition of medical and professional personnel in support of the IHS mission is authorized by U.S.C. 1638c.
          2. Expert or consultant services, as authorized by 25 U.S.C. 3019, are to be obtained in accordance with the FAR Subpart 37.104(f).
          3. Temporary services, such as clerical services, are to be obtained by employing private sector temporaries in accordance with the FAR Subpart 37.112.
       2. So far as may be practicable, Contracting Officers must ensure that the Buy Indian Act (25 U.S.C. 47) authority is utilized to the maximum extent possible when awarding personal services contracts.  The HHSAR Clause 352.270-2, Indian Preference may be appropriate for acquisitions under the simplified acquisition threshold.
       3. Prospective contractors are subject to the same quality assurance, credentials, licensure, and qualification standards as required of IHS personnel.  In addition, health care providers, other than paraprofessionals, must be licensed in the United States, the District of Columbia, Puerto Rico, or a Territory of the United States to perform the contract services within IHS facilities.  Contracting Officers must insert the following certification statement in all purchase orders and contracts for professional medical services:

          My license to practice [ ] has [ ] has not been terminated, suspended, or revoked in any State, the District of Columbia, Puerto Rico, or a Territory of the U.S.

          I currently hold an active medical license in the following State(s):

          State	License No.	Issue Date
          ____________________________	____________________________	____________________________
          ____________________________	____________________________	____________________________
          ____________________________	____________________________	____________________________

          I currently hold an inactive medical license in the following state(s):

          State	License No.	Issue Date
          ____________________________	____________________________	____________________________
          ____________________________	____________________________	____________________________
          ____________________________	____________________________	____________________________

          I hereby certify that for the purposes of the provisions of the Program Fraud Civil Remedies Act of 1986 (45 CFR 79), that to the best of my knowledge, each of the above statements is true, accurate, and does not omit any material fact that would render the statement false, fictitious, or fraudulent as a result of the omission.

          ____________________________	____________________________
          Signature of Practitioner	Date

       4. Pursuant to P.L. 103-226, the Federal Workforce Restructuring Act of 1994, an employee who has received a voluntary separation incentive payment and enters into a personal services contract within 5 years after the date of separation shall be required to repay to the Agency the entire amount of the incentive payment.
       5. Prospective contractors whose duties and responsibilities involve regular contact or control over children are subject to a character investigation as required by P.L. 101-630, the Indian Child Protection and Family Violence Prevention Act.  Manual Exhibit 5.5-7-K lists the positions subject to character investigations. The IHS personnel offices will conduct these investigations following award of a personal services contract.  The character investigation may be waived if, in the judgment of the Contracting Officer, in consultation with the Personnel Officer, an investigation has already been conducted and is on file.  Until the character investigation has been completed and the Contracting Officer notified of the results, the contractor must not have unsupervised contact with Indian children.
       6. The Federal Tort Claims Act Coverage for medical related claims is extended to individuals providing services pursuant to these contracts. The services performed must have been within the scope of the personal services contracts.
    5. Procedures.
       1. Responsibilities.
          1. The DCGP is responsible for oversight of the personal services contracting process within the IHS.
          2. Each Area Senior Contracting Officer and the Contracting Officers for the IHS Engineering Services Offices are responsible for the administration and management of contracts entered into pursuant to this authority, ensuring that effective means of obtaining adequate quality services are achieved in compliance with the FAR, HHSAR, and other applicable policies, guidelines, and directives, including the Buy Indian Act.
       2. Award and Administration of Personal Services Contracts.
          1. As prescribed in the FAR Subpart 13.103(d), the simplified acquisition procedures may be used to acquire personal services when the total aggregate value of the acquisition and any options do not exceed $50,000 and the requirements in HHSAR Subpart 313.104(i) are applicable.  The procedures cited in 13.103(g) may be used in concert with this authority when appropriate.
          2. Contract actions exceeding the simplified acquisition threshold are awarded and administered pursuant to the provisions of the FAR Part 37, the HHSAR Part 337, this chapter, and other applicable policy, guidelines, and directives.
       3. Accountability.
          1. The IHS supervisors, in order to establish lines of authority and accountability, may direct the activities of personal services contractors on the same basis as IHS employees.  Each contract with an individual or an entity, such as a professional corporation or partnership, must contain language that indicates the contractor acknowledges that the contract performance is subject to the supervision and direction of a duly authorized Federal officer or employee, i.e., Project Officer or alternate.
          2. The contract must contain a detailed description of the monitoring procedures used by the IHS to ensure contract compliance.  This description must also specify the Project Officer or alternate responsible for verifying contract compliance.
       4. Posting and Synopsis Requirements.  Acquisitions for personal services contracts, exceeding $25,000, may be exempt from the posting and synopsis requirements of the FAR Part 5, when the Contracting Officer provides adequate advance notice of contracting opportunities to potential contractors within the geographic vicinity the services are to be performed.
          1. Prospective contractors shall be solicited through at least one publication that serves the geographic vicinity of the health facility.  The notice must include the qualification criteria against which the prospective contractors responding will be evaluated.
          2. On the basis of simplified acquisition, requests for quotations or solicitations must state the basis upon which award is to be made.  When the award is to be based on other than price related factors, the evaluation factors located in Section 5.13 of this Chapter may be used as a guide.
       5. Evaluation.
          1. The FAR Subparts 13.106-1 and 13.106-2 must be used when the simplified acquisition procedures are used.
          2. See the FAR Subpart 15.608(3), HHSAR Subpart 315.15, and Section 5.7 of this Chapter for proposed contracts exceeding the simplified acquisition threshold.
       6. Negotiations.  Competitive negotiation procedures must be used in the acquisition of personal services contracts.
          1. The FAR Subparts 13.103(g) and 13.106-1 may apply when the simplified acquisition procedures are used.
          2. The procedures prescribed in the FAR Subparts 15.101, 15.605, 15.608, 15.609, 15.610, and 15.611, the HHSAR Subpart 315.6, and the IHM Chapter, Section 5-5 are to be used when the proposed contract exceeds the simplified acquisition threshold.
       7. Provisions and Clauses.  All required, Required when Applicable, or Optional Clauses must be incorporated into the resultant contract, purchase order or modification.  Unless specifically prohibited or inapplicable, the Contracting Officer may use clauses determined to be appropriate for a particular acquisition.
          1. The solicitation provisions and contract clauses (Matrix) in the FAR Subpart 52.301 and the HHSAR Part 352 must be used to ensure compliance.
          2. In addition to FAR Subpart 52.301, the provisions and clauses cited in Subpart 13.111 are inapplicable at or below the simplified acquisition threshold.  Options may be included in acquisitions when the simplified acquisition procedures are used provided that the requirements of Subpart 17.2 are met and the aggregate value of the acquisition and all options does not exceed the simplified acquisition procedures dollar threshold.
       8. Cancellation of Requirements.  If a fair and reasonable price cannot be obtained from a responsible prospective contractor, the requirement should be canceled.  The services may then be acquired using procedures other than those established for personal service contracts.
       9. One Response to an Advertised Requirement.  In the event that only one prospective contractor responds to an advertised requirement, the Contracting Officer is authorized to enter into negotiations and award a contract.  In this case the contractor must meet the minimum qualifications of the requirement and the Contracting Officer must determine that the price is fair and reasonable.
       10. Compensation.
           1. The personal services contractors are compensated only for periods of time actually devoted to the delivery of services required by the contract.  Each contract must provide for compensation for time actually worked, (e.g., per day, per week, per month) or provide for performance of a specific task at a fixed price.  The amount or rate of payment must be determined on a case-by-case basis.
           2. The Contracting Officers must make a written determination of the reasonableness of compensation to be provided under the contract taking into consideration the relative importance of the duties to be performed, the stature of the individual in his/her specialized field, comparable pay positions under the Classification Act or other Federal pay systems, rates paid by private employers, and rates previously paid for similar work.
           3. The Contracting Officers should obtain advice from the Personnel Officer concerning equivalent rates for Federal hires.

5-5.8  SMALL PURCHASES

1. Overview.  "Small Purchase" procedures are required to be used within the IHS for the procurement of supplies, nonpersonal services, or construction services when the "aggregate dollar amount" of the acquisition is at or below the "small purchase limitation" that is established by Federal regulations.

   Specific Federal regulations that concern small purchases are found in the FAR. Parts 8 and 13, and in the HHSAR. Part 313.

2. General.  Small purchase procedures are used for purchasing supplies, nonpersonal services, and construction services from open-market commercial sources when the "aggregate dollar amount" for any one transaction does not exceed the current "small purchase limitation."  This "aggregate dollar amount" includes all costs of the order, including freight and handling charges paid to the supplier.

   The following eight items are important considerations in the small purchase process:

   1. Purchases at or below the small limitation threshold are reserved exclusively for small business concerns, except in unusual circumstances.
   2. An individual order or known requirement cannot be split to permit negotiation under small purchase procedures, or to otherwise avoid the small purchase limitation.  Likewise, a group of items that would be properly grouped together, (such as several requests for electronic supplies), shall not be divided into more than one order to avoid this threshold.  (Refer to FAR 13.103(c).)
   3. Certain types of IHS acquisitions cannot be accomplished using small purchase procedures, regardless of aggregate dollar value.  These limitations are noted in Subsection C, below.
   4. IHS small purchase procurements start with a properly completed and approved requisition.
   5. The IHS is required to first check for availability of a supply or a service from a priority list of sources of supplies and services.  These sources must be used in PRIORITY ORDER, as established by regulations in the FAR.  Discussion of the priority list for supplies is contained in Subsection I, and for services under Subsection J.

      When no priority source is available, open-market commercial sources may be used to procure supplies or services.  Among commercial sources, first priority must be given to Indian-owned economic enterprises under the Buy Indian Act, and to other special set-aside businesses, such as those discussed under Section 3, Subsection J of this Chapter.

   6. When the small purchase amount is 10 under percent or less of the small purchase limitation, FAR 13.106 allows the CO to purchase directly from commercial sources without securing competitive quotations.  (See Subsection D below for further discussion.)
   7. Above the 10 percent limitation, either oral or written quotations must be solicited before a small purchase source is selected.  (See Section 8D, which follows, for a discussion of exceptions.)
   8. Small purchase awards for the procurement of supplies or services are made to commercial vendors by the IHS by using the special small purchase procurement methods described in FAR Part 13.
3. Limitations.  Small purchase procedures cannot be used for:
   1. Acquisitions made by sealed bidding or by competitive proposals that originally were estimated to cost more than the small purchase limitation, but will cost less than the small purchase limitation on the basis of bids received;
   2. Small purchases initially estimated to be under the small purchase limitation, but which will cost more than this threshold, based on actual quotations received;
   3. Acquisition or architectural/engineering professional services of any dollar amount;
   4. Acquisition of supplies or services on a cost-reimbursement basis;
   5. Acquisition of research and development, complex studies and services, or other requirements that require judgmental technical evaluations, or negotiations where the award cannot be made confidently on the basis of price alone; or
   6. "Off-the-shelf" training courses which can be obtained directly by an agency's Personnel Office.

   If small purchase procedures are used to obtain expert and consultant services, care must be exercised to avoid placing a personal service contract.  Refer to FAR 37.2 and HHSAR 337.2 for guidance in the acquisition of expert and consultant services using small purchase procedures.

4. 10 Percent Rule.  A basic principle of Government acquisition is that supplies and services should be obtained through the competitive process.  However, the administrative costs of obtaining competition for relatively low dollar small purchases may offset the savings from competition.

   Under FAR 13.106(a), small purchase under 10 percent of the small purchase limitation may be made without competitive quotations if the CO considers the prices reasonable.  Good judgment should be used to determine if a number of quotations are needed.  Repetitive purchases should be rotated among price-competitive sources, if practical.

5. Above 10 Percent Solicitation of Competitive Quotations.  For purchases over 10 percent of the small purchase limitation, the solicitation of competitive quotations is required when using commercial sources (generally from at least three sources).  The following factors should be considered when determining the number of sources to solicit:
   1. The type of product or service;
   2. Previous information available;
   3. Urgency of the proposed acquisition;
   4. Dollar value; and
   5. Past experience.

   If only one response is received, or the prices obtained indicate there was not adequate competition, a statement must be placed in the file describing why the price quoted is determined to be fair and reasonable.

   If only one source is solicited, the file must be documented to clearly indicate the reason for the lack of competition.  As specified in HHSAR 313.106(c)(2), the justification may be in the form of a statement on the requisition.

6. The Request for Quotations.  Solicitations for supplies or services at or under the small purchase limitation may be obtained either orally or in writing, except in the case of construction services where all solicitations over $2,000 must be in writing.
   1. In many cases, oral solicitations, generally by telephone, are sufficient for small purchases.
   2. Written solicitations are appropriate in the following situations:
      1. There are many items to be purchased making verbal quotations lengthy and difficult;
      2. A specification is involved that cannot be adequately communicated over the telephone;
      3. The firms are outside the local area; or
      4. Verbal quotations are not sufficient.
   3. When a written solicitation is required, a Request for Quotations (RFQ) (SF-18) should be used.  When using the SF-18, terms and conditions pertinent to the request and necessary for the purchase, including any special terms and conditions, may be added by the purchasing agent.  Guidance is contained in FAR 13.505-1(b) and 13.507.  Amendments to the RFQ must be in writing.  Awards resulting from RFQ’s should generally be made using an OF 347, Order for Supplies or Services.
7. The Requisition.
   1. Unless a Government purchase card is used, a requisition is required to begin a small purchase procurement action within the IHS.  (See Section 5-5.80(5) for further discussion of Government purchase cards.)
   2. A requisition is both a request and an authorization to procure supplies or services.  A properly prepared requisition includes a clear, complete, and accurate description of the item or service required; certification of required funds for the proposed acquisition; required delivery date; suggested sources of supply -- such as identification of any special or unusual aspects such as the use of Government property, special transportation requirements, etc.-- and all required clearances reviews, and approvals.
   3. The HHS-393, Purchase/Services/Stock Requisition, (Exhibit 5-5.8-A) is the prescribed form for use when requisitioning supplies or services within the IHS.  A properly prepared HHS-393 must be submitted for each proposed procurement unless a Government purchase card is used.
8. Basic Categories of Vendor Sources.  After receiving and reviewing a small purchase requisition, contracting personnel must decide the best source from which to obtain the supplies or services.

   There are two basic vendor source categories for IHS small purchases: required sources of supplies and services, and open-market commercial sources.

   Priorities in the selection of vendor sources are established both by Federal law and regulation and must he followed when using either required or commercial sources.  The priorities in the use of vendor sources differ, however, when supplies are purchased and when services (including construction services) are purchased.  See Sections 8I and 8J, which follow, for a description of these differences.

9. Source Priorities for the Acquisition of Supplies.  If the IHS requisition is for supplies, IHS procedures require that the sources listed below must be checked first, and the supplies purchased from the highest rank order priority source, if possible, before considering procurement from a commercial source.

   The priority order for the consideration of vendor sources when procuring supplies is as follows:

   1st - -	Agency Inventories.  The IHS supply management system includes various depots and stores, including the Supply Service Center at Perry Point, Maryland, that stock items that are in heavy demand. Perry Point is a full service medical supply center that provides pharmaceuticals, medical and dental supplies to over 1,800 health care facilities worldwide.  Perry Point currently maintains an inventory of approximately 3,000 different items.  Because of volume purchasing, Perry Point usually receives significant discounts from its suppliers. The respective Area IHS Property Management Office should also be contacted to see if suitable excess Agency inventory is available.
   2nd - -	Excess from Other Federal Agencies.  Each GSA Regional Office distributes catalogs and bulletins that list available items.  These items range from office furniture to scientific and technical equipment.  The respective Area IHS Property Management Officer should be contacted to see if suitable excess property is available.
   3rd - -	UNICOR.  (Federal Prison Industries) is a Government corporation that provides training and employment for prisoners in Federal Correctional institutions.  Agencies must order from UNICOR if they can provide the item. A clearance must be obtained from UNICOR before using other sources of supply where UNICOR produces similar items. The UNICOR Schedule and exceptions to ordering from UNICOR are in FAR 8.6.
   4th - -	Committee for Purchase from the Blind and Other Severely Handicapped.  Federal law requires all Federal departments and agencies to buy brooms, mops, brushes, and other suitable commodities from nonprofit "workshops" for the blind and other severely handicapped.  Many workshop products are purchased directly by GSA and placed in their stores for later purchase by other agencies.  These products can be ordered directly from GSA through normal FEDSTRIP procedures. To get products or services not stocked by GSA, a request should be made for an "allocation" from a nonprofit central agency that represents certain workshops or an order should be placed directly with a particular workshop.  The proper method is found in the Procurement List published by the Committee for the Blind and Other Severely Handicapped.  Permission must be obtained before using a source for supplies other than those produced by the Committee.  Exceptions to ordering from the Committee are in FAR 8.706.
   5th - -	Wholesale Government Supply Sources.  GSA, through its Federal Supply Service, is a primary supplier of personal property and nonpersonal services of Federal civilian agencies.  Items available from GSA are found in one of several GSA Supply Catalogs, which may be obtained from GSA. GSA also has Customer Supply Centers located throughout the country.  These stores provide items available through the supply catalog as well as other locally-used, expendable items such as copy machine paper. The GSA Supply Catalog is a mandatory source of supply.  If items are not available from other higher-priority sources, the contracting activity must order from the catalog unless one of the following exceptions applies:

   1. The value of a line item is less then $500.
   2. The items are required to meet public emergency needs (e.g., fire, flood, national disaster, et cetera).  The file must be documented to show the urgent need and the nature of the exigency.
   3. The items meet unforeseen day-to-day requirements.
   4. The same items are available from a Federal Supply Schedule and are lower in cost.
   5. The requirement is for marginally punched forms or blank paper and envelopes for delivery in the District of Columbia and can be obtained through the Government Printing Office.
   6. The GSA item will not serve the intended purpose.  A waiver must be obtained from the Commissioner, FSS before a purchase from other sources can be made.

   Other stock programs include the Defense Logistics Agency (DLA) and the Department of Veterans Affairs (DVA).  DLA supplies items such as fuel, lubricants, and packaged petroleum products through the Defense Fuel Supply Center (DFSC).  The DVA keeps a stock of medical items.

   6th - -

   Priority Federal Supply Schedules.  Federal Supply Schedules (FSS) are contracts awarded by GSA with many suppliers for a variety of goods and services.  Federal Departments and agencies use these schedules to obtain these goods and services by placing delivery orders against established scheduled contracts.  The Federal Supply Schedule Program Information (in the GSA Supply Catalog) has a complete list of the supplies and services available, and specific instructions on how to use them.  The schedules identify agencies required to use them as a required source of supply.  Exemptions to the priority use of Federal Supply Schedules are as follows:

   1. Urgent Requirements.  A schedule is not required for use when the specified delivery period is shorter than that provided by the schedule and the contractor is unable to meet it.  The file must be documented as to the need for the shorter delivery time.
   2. Small Requirements.  An order for less than the minimum amount specified on the individual schedule.  However, this does not preclude requesting, nor the contractor accepting, orders below the minimum amount.
   3. Maximum Order Limitation.  Each schedule has a maximum dollar value, and an order may not be submitted above this amount.  For purchases above these amounts, a FEDSTRIP must be prepared and sent to the appropriate GSA Regional Office.  A one-time authority to buy on the open market to meet the requirements may also be requested.
   4. Geographic Location.  A schedule is not required to be used if a location is not provided for under the contract.
   5. Lower Prices for Identical Items.  Schedule use is not required if the identical item is available at a lower price from another source.

   When an ordering office, that is a required user under a schedule, determines that items available from the schedule will not meet its specific needs, but similar items from another source will, FAR 8.404-3 requires such ordering office to submit a request for waiver to the Commissioner, Federal Supply Service, GSA, Washington, DC 20406.  Requests for waiver must include the following:

   1. A complete description of the item requested including any descriptive literature, drawings, etc.;
   2. A comparison of prices and pertinent technical differences between the item requested and the GSA item;
   3. The inadequacies of the GSA item in performing required functions;
   4. Advantages of the item requested, such as technical or cost considerations;
   5. The quantity required, including anticipated future requirements; and
   6. Estimated annual usage or statement that the requirement is non-recurrent or unpredictable.

   GSA must approve the request for a waiver before a supply item can be purchased from a non-schedule source, except as otherwise provided in inter-agency agreements.

   7th - -

   Optional Federal Supply Schedules.  If an FSS schedule is optional, orders may still be placed with the schedule contractor.  The schedule contractor is not required to accept orders from Federal Departments or agencies that are not required users of the schedule; however, contractors often are willing to accept such orders.  If a schedule contractor refuses an order, the purchase may be made from a lower-priority source without special justification.

10. Commercial Sources.  "Commercial sources" are open-market commercial suppliers.  Generally, commercial sources are for-profit businesses, but also may be educational institutions or nonprofit entities.

    There are a number of ways of identifying sources.  The IHS originator of the requisition or RFC is required to provide a list of recommended sources, with the requisition or RFC which includes the previous provider of such supplies, if any.  Also a "Bidder's List" is usually maintained by the respective Contracting Office.  The local yellow pages or telephone directories and a number of registers, such as the Thomas Register of American Manufacturers, also are used.

11. Commercial Source Set-Asides.  Before considering a small purchase acquisition from any other commercial source, two priority set-aside sources must be considered in the following sequence:  first, Indian-owned economic enterprise under the Buy Indian Act; then, second, small and economically disadvantaged business concerns.  Each of these priorities is discussed, in turn, in the paragraphs that follow.
    1. PHSAR 380.501 requires that supplies and services be purchased from Indian-owned economic enterprises pursuant to the Buy Indian Act whenever it is practical to do so.
    2. After Indian-owned economic enterprises are considered, purchases at or below the small purchase limitation are reserved exclusively for small business concerns unless the CO decides that obtaining quotations from two or more responsible small businesses is unlikely.

       The businesses must be competitive in price, quality, and delivery.  The requirements for the small business/small purchase set-aside are found in FAR 13.105 and HHSAR 313.105.

       If the CO receives only one quotation with a reasonable price from a responsible small business concern under a small business/small purchase set-aside, the CO is to make an award to that small business.

       If the CO determines that a small purchase shall be made on an unrestricted basis (e.g., full and open competition), and not from a small business, the CO must document in writing the reason for this decision, in accordance with HHSAR 313.105.

       Although labor surplus and women-owned small business set-asides are not required for small purchase, efforts should be made to make awards to these firms, when possible, and to maintain records for reporting purposes.

       Additional information concerning small business set-asides and other socio-economic programs is available from the SADBUS and SBTA.  See section 5-5.3J for a discussion of the SADBUS and SBTA.

12. Source Priorities for the Acquisition of Services.  If the IHS requisition is for services, including construction services, IHS procedures require that the priority sources listed below must be checked first, and the services purchased from the highest rank order priority source, if possible, before considering procurement from a commercial source.

    The priority order for consideration of vendor sources when procuring services is as follows:

    1st - -	Committee for Purchase from the Blind and Other Severely Handicapped.
    2nd - -	Indian-owned/Economic Enterprises under the Buy Indian Act.  (As of the date of this draft, this current priority for use of Indian-owned economic enterprises is under review.  A revision to this current priority is anticipated in FY 1994.)
    3rd - -	Mandatory FSS and Mandatory GSA Term Contracts.
    4th - -	Optional FSS and Optional GSA Term Contracts.
    5th - -	Federal Prison Industries, Inc. (UNICOR).

    If the required services cannot he procured from any of these priority sources, then such services may be procured from an open-market commercial source.

    The SADBUS or SBTA may also identify sources as part of the small business/labor surplus set-aside review, as more fully described in the preceding Subsection K.

13. Execution of an Award Document for Acquisition from a Priority Source.  Purchase from a priority source requires completion and use of Optional Form 347 -- Order for Supplies or Services, and then forwarding of the completed form to the vendor. In each case, current pricing and delivery information should be obtained from the vendor before ordering.
14. Execution of an Award Document for Acquisition from a Commercial Source.  Purchase from a commercial source also requires completion of an award document, or use of other small purchase methods, as discussed under Subsection N -- Methods of Commercial Procurement, which follows.
15. Methods of Commercial Procurement.  Within the IHS there are several small purchase methods available to complete a procurement.  These range from simplified techniques for low dollar purchases to the use of a standard purchase order.  These methods include use of a Blanket Purchase Agreement, Imprest Fund, Standard Form 44-- Purchase Order-Invoice-Voucher, and Optional Form 347.
    1. Blanket Purchase Agreements.  A Blanket Purchase Agreement (BPA) is the Government’s equivalent of opening a charge account with a vendor.  BPAs are used for reducing the paperwork for orders when there are repetitive needs for supplies or services from a given vendor, but exactly how many or when these supplies or services will be needed is unknown.  BPAs are usually made with local firms, thus reducing the amount of time required for purchase and delivery, and minimizing the paperwork involved.  BPAs may also be placed with FSS contractors as long as the agreement is consistent with the terms and conditions of the FSS agreement.

       BPAs may be made without a funded purchase requisition.  A BPA may be limited to furnishing individual items or commodity groups or classes, or it may be unlimited for all items or services that the source of supply is in a position to furnish.  (FAR 13.203(h)).

       The document to establish a BPA must contain the terms and conditions set forth in FAR 13.203-1(j).  The FAR subsection requires a description of the agreement; extent of the Government’s obligation; pricing statement; purchase limitation; notice of individuals authorized to purchase under the BPA; their dollar limitations by title of position, or name, and delivery ticket and invoice information.  Additional requirements concerning the use of BPAs are contained in FAR 13.201; 13.203-1; 13.203-2; 13.204; 13.205, and 13.206.

       Generally, orders against a BPA are placed orally, however, a purchase document (OF 347 -- Order for Supplies or Services) may be issued when necessary to insure a complete understanding of the transaction.

       BPAs should be written with two or more firms in a given category. Then orders can be made with the firm offering the best price at the time an order is placed.  If only one BPA is written in a given category, prices must be solicited from other firms for individual orders when the price of the individual order exceeds 10 percent of the small purchase limitation.

       Reviews of existing BPAs shall be made annually by the CO who entered into the BPA, or by the CO’s designated representative, to insure that authorized procedures are being followed.  Changes in market conditions, sources of supply, and other factors may warrant making new agreements with different suppliers or modifying existing agreements.

    2. Imprest Fund.  An imprest fund is a cash fund of a fixed amount in the form of currency, or Government check administered by a delegated financial officer.  The authorized agent (cashier) may issue cash or make payments as specified in his/her authorization.  Imprest funds should be used whenever possible since this is a very economical means of purchase.  In accordance with FAR 13.404(a), use of the imprest fund in HHS is limited to small purchase transactions that do not exceed $500.  Typical examples of use include:
       1. Readily available commercial items that can be obtained over-the-counter with immediate cash payments;
       2. Emergency, fill-in, occasional, or special one-time purchases;
       3. Single office machine repairs;
       4. Purchase of stamps, transportation tokens, and C.O.D. charges;
       5. Purchase when vendors are reluctant to accept small purchase orders or are not equipped to bill using normal business policies.
    3. SF-44 Purchase Order-Invoice-Voucher.  The standard Form 44 is a pocket size purchase order form.  It is designed for on-the-spot over-the-counter purchases of supplies and nonpersonal services by authorized individuals.  It is a multipurpose form that can be used as a purchase order, receiving report, invoice, and public voucher.  Standard Form 44s may only be used when all of the following conditions are met:
       1. The amount does not exceed $2,500 (except in the case of public emergency);
       2. The supplies or services are immediately available;
       3. Only one delivery and one payment will be made; and
       4. Its use is more economical and efficient that other purchasing methods.

       The SF-44 is almost like a blank check and could be misused.  Therefore, the responsible acquisition official who authorizes its use must maintain records of the serial numbers of each form, to whom it was issued, and the date of issue.  Copies of the form not issued must be kept under lock and key.  SF-44s are particularly effective for remote locations that have no other delegated procurement authority or for Government employees on travel who may have to purchase items for the Government.

    4. Optional Form 347.  When one of the three simplified techniques described above cannot be used, purchase orders are issued using the Optional Form 347 - Order for Supplies or Services.  This is the most commonly used small purchase method.

       The OF 347 is a multipurpose form that is designed for use as a purchase order, a receiving and inspection report, and an invoice.  It is also used as a delivery order for acquisition under indefinite delivery contracts or from established Government sources.  When used as a purchase order, the OF 347 must contain all the items and conditions applicable to the acquisition.  When used as a delivery order under an existing contract, all information required for the acquisition, and not contained in the basic contract, must be included in the delivery order.

    5. Purchase Card Use.  The use of the U.S. Government credit card program, the International Merchant Purchase Authorization Card (IMPAC), has been approved for implementation in the IHS.  All IHS Areas should be using the IMPAC by the end of FY 1995.
16. Reporting Small Purchases.  Small purchases are reported to the PORA, on a quarterly basis using Standard Form 281 (Summary Contract Action Report).  All small purchase awards are to be reported, except for the following:
    1. Government Bills of Lading and Government Transportation Requests;
    2. Training authorizations;
    3. Actions using non-appropriated funds (except for transactions involving Perry Point, which are to be reported);
    4. Interagency agreements;
    5. Contracts under the small purchase limitation resulting in award of a contract using SF 26 -- Award/Contract and SF 33 -- Solicitation, Offer and Award, which are to be reported in the IHS Contracts Information System.

    In FY 1994, an automated small purchase reporting system replaced the previous IHS manual system.  This automated system compiles comprehensive data on IHS small purchases.

    A summary chart that outlines the various steps in the IHS small purchase process is provided in Exhibit 5-5.8-B, which follows.

5-5.9  CONTRACT AWARD FILES--STRUCTURE, CONTENT, MAINTENANCE

1. Policy.  Specific regulations concerning the maintenance of contract award files are found in FAR Subpart 4.8.
2. General.  The SCO is responsible for establishing and maintaining files containing the records of all contractual actions.  These files must be current and complete and constitute the “official” contract file.  The file should contain all documentation relating to the solicitation, award, and contract administration.  Completed contract files may be transferred to the records center as provided by the National Archives and Records Administration.
3. Contents of Contract Files.  Contract documents should be filed according to subject matter.  The contract file should be numerically tabbed, filed in reverse order starting with first item (1) on the bottom of the file and the highest number on the top.  Documents within each tab should be filed chronologically with the most recent document on top.

   If any document is too voluminous to be placed under the applicable tab, it should be included in a separate file and the tab annotated with the location of the file.  All of the items described in the contract file checklist will not always be needed for each contract.  If a particular tab is not required, it should be omitted from that contract file and the checklist so noted.  The file should be tabbed in accordance with the Standardized Contract File Checklist.

4. Standardized Contract File Checklist.  All IHS contracting offices shall use a Standardized Contract File Checklist established and provided by IHS, DCGP.  This Standardized Contract File Checklist is included as Exhibit 5-5.9-A.  The use of this checklist is required effective with the publication of this IHM Chapter.
5. Contract Closeout Checklist.  All IHS contracting offices shall use a standardized contract closeout checklist provided by IHS, DCGP.  This standardized contract closeout checklist is included as Exhibit 5-5.9-B.

5-5.10  ARCHITECTURAL AND ENGINEERING CONTRACTING

1. Overview.  IHS acquisition of architectural and engineering services represents one of several procurement “special situations” for which special policies and procedures are prescribed in the FAR, HHSAR, and PHSAR.

   Federal Regulations governing the acquisition of architectural and engineering (A&E) services are found in the FAR Subpart 36.6--Architect-Engineer Services.  These policies and procedures reflect the requirements of Public Law 92-582, which is commonly referred to as the “Brooks Bill.”  In addition, PHSAR Subpart 336.6 should be consulted regarding the development of a special document known as a Program of Requirements (POR) used for review, approval, and funding certification.

   Public Law 92-582 requires that contracts for A&E services be based on competitive procedures.  A&E contracts must be publicly announced and negotiated at fair and reasonable prices based on demonstrated competence and qualifications.  FAR 36.601-2, Competition, states that competitive procedures include acquiring A&E services in accordance with the provisions of FAR 36.6.  FAR 36.601-3 requires that A&E contractors shall be selected following the procedures in FAR 36.6--not the solicitation and source selection procedures in Parts 13, 14, and 15 of the FAR. An exception is provided under FAR 36.606(a) which indicates that A&E negotiations are to be conducted in accordance with the provisions of Part 15 of the FAR.

   It is important to understand that cost or price is not a primary factor in the A&E selection process.  FAR 15.903(d)(1)(ii) limits the fee for the production of designs, including plans, drawings, and specifications.  The fee can be no more than six percent (6%) of the estimated cost of the construction (excluding the amount of the fee).  This limitation applies only to design.  It does not apply to services performed in the planning stage or for contract administration.

2. Steps in the A&E Process.  Many of the steps (e.g., preparing a synopsis for the CBD) are virtually identical to those utilized in non-A&E contracting.  Therefore, only those steps of particular significance are discussed here.  A summary flow chart of the A&E contracting process within the IHS is provided as Exhibit 5-5.10-B at the end of this Section.

   While the process used to select an A&E firm depends somewhat on the estimated amount of the contract, the basic principles are the same, regardless of the amount of the contract.  It is also important to note that acquisitions for A&E services of $25,000 or less are not considered to be small purchases within the context of FAR Part 13.  Therefore, simplified purchase techniques, as defined by FAR Part 13, cannot be used.

   Instead, FAR 36.602-5 prescribes processes for the selection of A&E firms when the anticipated amount of the contract is not expected to exceed the small purchase limitation.

3. Evaluation Board.  FAR 36.602-2 requires the establishment of an Architect-Engineer Evaluation Board composed of members whose expertise includes architecture, engineering, construction, and related acquisitions.  FAR 36.602-3 requires that the Evaluation Board shall review the current data files on eligible firms, evaluate the firms, and hold discussions with at least three of the most highly qualified firms and prepare a selection report for the selecting authority.
4. Buy Indian Requirement.  The requirement to hold discussions with at least three of the most highly qualified firms is a statutory requirement.  Therefore, a Buy-Indian set-aside would not be proper unless it could be established that there were at least three qualified Indian-owned firms available to perform the service.  If at least three qualified Indian-owned firms can be identified, the CBD synopsis shall state that the project is set-aside for Indian-owned firms.
5. Identification of Qualified A&E Firms.  Firms that are qualified to perform the service can be identified in one of two ways: (1) from the “Architect-Engineer and Related Services Questionnaire” (SF 254) and from the “Architect-Engineer and Related Services Questionnaire for Specific Project” (SF 255) received in response to the CBD synopsis, or (2) from SF 254s retained by the respective IHS Awarding Activities Office or the IHS Headquarters SADBUS.  Frequently, A&E firms “market” their services by furnishing contracting offices with copies of their SF 254 in advance of a solicitation and update their SF 254 each year.

   The Evaluation Board (see discussion under the preceding Subsection 5-5.7Q) identifies the firms that meet the basic requirement.  Such firms identified as being the most highly qualified by the Evaluation Board are generally referred to as the “short list.”  The expedited process provided in FAR 36.602-5 may be authorized for some awarding offices.

   The CO sends each firm on the short list a letter advising such firms of their selection.  The CO and the Evaluation Board then hold discussions with each firm on the short list.  At the conclusion of these discussions, the Evaluation Board and the CO review the results of the discussions and the Board ranks the firms in order of priority and makes its recommendation to the Selection Authority.

6. Selecting the A&E Firm for Negotiation.  Within the IHS, the designated A&E Selection Authority is the Director, Division of Facilities, Planning, and Construction at IHS Headquarters.  The Selection Authority may change the order of priority; but if this is done, he or she must provide a written justification for the contract files for such action.  The Selection Authority can question the inclusion of any or all firms on the short list and can return the list to the Evaluation Board for revision.  In such case, however, the Selection Authority must advise the Evaluation Board of the reasons for such action.

   In no event can the Selection Authority add firms to the selection report.  If the Selection Authority does not believe that any of the firms are qualified or that the report is not adequate, the Selection Authority may return the report to the Evaluation Board with the reasons for such action clearly stated in writing, and require the Board to address the issue or issues.

   After approval by the Selection Authority of the top ranked firm, the CO may release the name of the top ranked firm before issuing the RFP to that firm.  However, this notification is required for all A&E contracts awarded under the Buy Indian or small business set-aside provisions.

7. Negotiation and Award of Contract.  The basic purpose of the RFP is to facilitate negotiations.  The A&E firm will be required to submit a business proposal that addresses the amount and type of contract, along with supporting cost and pricing data. When firm requirements are identified in the RFP, the A&E firm also can be requested to furnish a technical proposal with design concepts, work schedules, and management plans.  In addition, the technical proposal may cover personnel to be utilized, their experience and qualifications, and time they will devote to the project.

   After the response to the RFP is received and evaluated, negotiations should be held with the firm selected for contract award.  In the event a satisfactory price cannot be agreed upon with the highest ranked firm, the CO should obtain a written “best and final” offer from the firm and if the offer is not deemed acceptable, notify the firm of the termination of negotiations (FAR 36.606(f)).  After notifying the A&E firm of the termination, the CO can initiate negotiations with the second ranked firm.

   When an A&E award is being made on behalf of the IHS and its estimated value exceeds $100,000, appropriate Awarding Activities Office must submit the proposed award to the Director, Division of Contracts and Grants Policy (DCGP) for preaward review and approval.  Submission thresholds for all IHS Area Offices are provided under Exhibit 5.5-10-A which follows.

   This preaward review requirement applies to new contracts and modifications of existing contracts meeting or exceeding these thresholds except in the case of those priced options that were synopsized, evaluated, and reviewed by DCGP, at the time of contract award.  During normal work periods, proposed awards must be submitted to DCGP for review no later than fifteen working days prior to the expected award date, unless the CO justifies the need and arranges for an expedited review by DCGP.

8. Indefinite Delivery Contract Term Length and Dollar Ceiling.  When an Indefinite delivery contract (IDC) is used to acquire A&E services, the following special provisions apply concerning term length and dollar ceiling levels:
   1. The maximum basic A&E IDC term is one base year with four one-year options.
   2. The maximum amount of an individual task or delivery order is $300,000.
   3. The maximum contract per year is $1 million.
   4. The maximum total contract award is $5 million over a span of five years, assuming the exercise of the four option years.

5-5.11  CONSTRUCTION CONTRACTING

1. Overview.  IHS acquisition of construction services represents another of the procurement “special situations” for which special policies and procedures are prescribed in the FAR, HHSAR, and PHSAR.

   FAR, Part 36 provides the primary coverage of the policies and procedures for construction contracting and takes precedence if there is a conflict between it and other parts of the FAR.  As stated in FAR 36.101(b):

   "When a requirement in this Part is inconsistent with a requirement in another part of this regulation, this Part 36 shall take precedence if the acquisition of construction or architect-engineer services is involved."

   Other important FAR, HHSAR and PHSAR Parts and Subparts that impact construction contracting include:

   1. FAR 12.2, Liquidated damages provisions;
   2. FAR 19.9, Acquisition of construction using the Small Business Administrator’s Section 8(a) program;
   3. FAR 22.4, Labor standards for contracts that involve construction; and
   4. FAR 28.101 through 28.103, (PHSAR 380.503(c)(f)), Bid guarantee, performance, and payment bond requirements.

   Construction is defined in FAR 36.102(d):

   Construction means construction, alteration, or repair (including dredging, excavating, and painting) of buildings, structures, or other real property.  For purposes of this definition, the terms buildings, structures or other real property include, but are not limited to, improvements of all types, such as bridges, dams, plants, highways, parkways, streets, subways, tunnels, sewers, mains, power lines, cemeteries, pumping stations, railways, airport facilities, terminals, docks, piers, wharves, ways, lighthouses, buoys, jetties, breakwaters, levees, canals, and channels.  Construction does not include the manufacture, production, furnishing, construction, alteration, repair, processing, or assembling of vessels, aircraft, or other kinds of personal property.

   FAR 22.401 uses a different definition of construction to determine what labor standards apply to a contract.  In this definition, the “site of the building or work” is very important in determining the use of the contract labor standards.

   The definition is as follows:

   Construction, alteration or repair, as used in this subpart, means all types of work done on a particular building or work at the site thereof, including, without limitation, altering, remodeling, installation (if appropriate) on the site of the work of items fabricated off-site, painting and decorating, the transporting of materials and supplies to or from the building or work by the employees of the construction contractor or construction subcontractor, and the manufacturing or furnishing of materials, articles, supplies, or equipment on the site of the building or work by persons employed by the contractor or subcontractor.

2. Construction Planning.  Within the IHS, acquisition planning is required for all new construction acquisitions over $25,000, in accordance with Section 5 of this Manual chapter.  Although construction is normally obtained using the Sealed bidding method of acquisition, certain construction requirements are met utilizing Negotiated acquisition methods.
3. Steps in the Process.  The flow charts at the end of this chapter illustrate the normal process for Sealed bidding (Exhibit 5-5.11-B) and Negotiated construction (Exhibit 5-5.11-C) contracts, and provide approximate construction acquisition timeframes for each step.
4. The Davis-Bacon Act.  The Davis-Bacon Act was originally enacted in 1931 to prevent Federal construction projects from depressing the wages in the locality where the construction was taking place.  The law applies to all Government contracts involving the employment of laborers or mechanics in the construction, alteration, or repair of public buildings or public works when the contract is estimated to exceed $2,000.00.  The Act authorizes the Secretary of Labor to determine the prevailing wages and to set the minimum wages to be paid when Federal funds are used to finance construction.

   There are two types of wage determinations issued by the Secretary of Labor:  general wage determinations and project wage determination, which are defined as follows:

   1. A general wage determination has prevailing wage rates to be used in a specific geographic area.  It lists the types of construction covered by the determination, e.g.. heavy, highway, building, etc. General wage determinations remain valid until modified, superseded, or canceled by notice in the Federal Register by the Department of Labor.
   2. A project wage determination is issued on the request of Contracting Agency when no general wage determination applies.  A project wage determination is only effective for 180 calendar days from the date of the determination.

   FAR 22.404-3(c) states that a Contracting Agency should submit its request for a project wage determination to the Department of Labor “at least 45 days (60 days if possible)” before issuing the solicitation.  It points out, however, that the time required for processing varies according to the facts and circumstances in each case.

   Requests must be submitted on an SF 308, Request for Determination and Response to Request.  Send requests to:

   Department of Labor
   Administrator
   Wage and Hour Division
   Washington, D.C. 20212
   Attention:  Construction Contract and Wage Determinations
   

   The location of the construction project will determine if it is covered by a general wage determination or if a project wage determination must be requested.

   FAR Subpart 22.4, Labor Standards for Contracts Involving Construction, describes the methods to be used for determining wage rates for the contract.  In certain instances where a modification may be required, FAR 22.404-6, Modifications of Wage Determinations, must be reviewed to see if a wage rate must be included in the solicitation and resulting contract.

5. Enforcement of Labor Standards.  Under the Davis-Bacon Act, the Contracting Officer must ensure that:
   1. Employees are paid in accordance with the rates established by the Secretary of Labor;
   2. Employees are correctly classified;
   3. Time and one-half is paid for every hour worked in excess of 40 hours per week;
   4. There are no unauthorized deductions made from employee wages;
   5. Employees are paid weekly;
   6. The contractor submits weekly payrolls that have been properly certified for its employees and subcontractors;
   7. The Government retains these for a period of not less than three years.

   If apprentices are used, the contractor must have an apprenticeship program that is registered with the Department of Labor or a State apprenticeship agency.  Wage determinations do not include wage rates for apprentices.  These are included in the registered program and are usually based on prevailing State apprentice scales.

   The ratio of apprentices to journeymen must not exceed those included in the registered program.  On site interviews should be made of employees on a random basis to be certain they are being properly classified and paid.

6. Buy Indian Policy.  The Buy Indian Act and its effects on IHS acquisitions. including construction acquisitions, are discussed in detail in Section 6 of this Chapter.
7. Presolicitation Notice.  The CO shall send presolicitation notices to prospective bidders on any IHS construction requirement when the proposed contract is excepted to equal or exceed $100,000, unless this requirement is waived by the HCA or his/her designee.  Presolicitation notices are optional for construction contracts expected to be less than $100,000.  In accordance with FAR 36.302, presolicitation notices are to be issued sufficiently in advance of the invitation for bids in order to attract the interest of the largest number of prospective bidders.

   A presolicitation notice for a construction requirement shall:

   1. Describe the proposed work in sufficient detail to disclose the nature and volume of work;
   2. State the location of the work;
   3. Include tentative dates for issuing bid invitations, for bid opening, and for completing contract performance;
   4. Indicate where plans will be available for inspection without charge;
   5. Specify a date for requesting the invitation for bids;
   6. Notify recipients that do not choose to submit a bid that they must notify the issuing office as to whether they wish to receive future presolicitations notices;
   7. Indicate whether the award is restricted to small business;
   8. Specify the amount of charge, if any, for presolicitation documents, and
   9. Be published in the CBD.
8. Additive or Deductive Bid Items.  When it appears that funds available for a project may be insufficient for all the desired features of construction, the CO may provide in the solicitation for a base bid item covering the work generally as specified and for one or more additive or deductive bid items which progressively add or omit specified features of the work in a stated order of priority.
9. Determination of Time for Bid Preparation.  FAR 36.303(a) states that invitations for bids for construction shall allow sufficient time to prepare and submit a bid.  This must include time to investigate the site conditions, examine the data, and obtain subcontractor bids.

   FAR 14.202-1(a) requires that a minimum bidding time (i.e., the time between the issuance of the solicitation and the opening of the bids) of at least 30 days be provided when a synopsis is required, as specified under FAR 5.2.

   This latter section simply requires sufficient bid preparation time.  The question then becomes, what is sufficient bid preparation time?  There is no rule of thumb or formula that can be applied because there are so many factors involved.

   Although 30 days might be sufficient time for a relatively small, uncomplicated project, it would not be sufficient time for a large or complex project requiring subcontractors, or imposing numerous other time consuming aspects.

   The goal is to allow sufficient time for the bidders to fully prepare their bids and to avoid “contingency” bidding.

10. Bonding.  The “Miller Act” requires performance and payment bonds for construction contracts over $25,000.  FAR 28.102-1(b) requires the contractor to have bonds before they receive the notice to proceed to start work under a contract.  Failure to provide required bonds may result in the construction bid being determined as non-responsive.

    FAR 28.101-1(a) requires a bid guarantee when a performance bond or a performance and payment bond is required.  The Miller Act sets the amount of a bid guarantee at 20% of the contractor’s bid price (see FAR 28.101).  The amount of the payment bond varies depending on the size of the contract (see FAR 28.102-2 for further guidance).  The penal amount for performance bonds is indicated in FAR 28.102(a).

    The CO shall insure that all bonds are reviewed carefully for compliance with the requirements of the solicitation.  The corporate surety that provides the bond must also be on the list of companies accepted by the Federal Government.  The list is found in the Department of Treasury Circular 570, Companies Holding Certificates of Authority as Acceptable Sureties on Bonds and Acceptable Reinsuring Companies.  This list is published in the Federal Register on July 1st of each year, although it also may be updated periodically throughout the year.

    Individual sureties should also be carefully reviewed to be certain they meet the requirements of FAR 28.203.  Special attention should be given to FAR 28.203-2, Acceptability of Assets.  In accordance with FAR 28.203(f), the CO shall obtain the opinion of the HHS Office of General Counsel as to the adequacy of the documents pledging the assets of an individual surety prior to accepting the bid guarantee and performance and payment bond.

    The Comptroller General has held that if the Contracting Officer decides that an individual surety in support of a bid bond is unacceptable, the bidder shall be rejected as nonresponsive.  In this instance, the determination does not have to be referred to the Small Business Administration for a competency review.

    FAR 28.204, 28.204-1, and 28.204-2 address optional types of securities that can be furnished by a contractor in lieu of a surety bond.  Such optional securities include United States bonds or notes, certified or cashiers checks, post office money orders, or currency in an amount equal to the penal sum of the bonds.  This section should be consulted when something other than a surety bond is furnished.

    The bond and related forms are listed in FAR 28.106-1.  A bid bond will sometimes be submitted on a corporate surety form.  In such cases, carefully review the bond to be certain it does not diminish the Government rights set forth on the SF 24, Bid Bond. If it is acceptable, the contract’s bid can be accepted.  If it is not acceptable, the bid must be rejected as nonresponsive to the solicitation.  If the CO determines it is necessary, the matter should be referred to General Counsel before rejection of the bid.

11. Insurance.  FAR 28.3 indicates the various contractor requirements regarding insurance coverage.

    In general, contractors shall be required to carry insurance under the following general circumstances:

    1. The contractor is subject to Cost Accounting Standard (CAS) 416 (see 4 CFR 416) and is required to obtain insurance, either by purchase or self-coverage, for perils to which the contractor is exposed, except in cases where specified contractual indemnities or other limitations apply (as detailed under FAR 28.301(a)).
    2. The contractor is required by law or regulation to provide insurance for certain types of perils, such as workers’ compensation, whether or not subject to CAS 416.  Insurance is also mandatory when commingling of property; type of operation; circumstances of ownership, or condition of the contract make it necessary for the protection of the Government.  (Consult FAR 28.301(b) for further requirements regarding minimum insurance amounts, multi-agency involvement, and other matters.)
    3. The contractor is awarded a non-personal services contract for health care services and is therefore required to maintain medical liability insurance and to indemnify the Government for liability producing costs or omissions by the contractor, IHS employees, or agents. (See FAR 28.301(c)).

       FAR 28.3 contains a number of additional requirements and instructions that apply to various specific contract situations. These provisions should be reviewed by the CO for their possible applicability to each construction contract.

12. Opening of Bids.  FAR 14.402, Opening of Bids, should be reviewed by the designated Bid Opening Officer before the time set for bid opening arrives.

    FAR 14.402 describes the proper procedures for the handling of bids prior to bid opening, at bid openings, and after bid opening.  Late bids submitted should be handled in accordance with FAR 14.304.

13. Determining Offeror Responsibility.  There are several things that must be taken into consideration when determining the responsibility of an offeror.  The first is the offeror's capability to perform the work.  This includes the offeror's availability to perform within the time specified in the solicitation.  The second is whether the offeror has the financial resources to carry out the work pending receipt of payment from the Government.  The last is the contractor’s past performance.  This record should be examined to determine whether the company has demonstrated business integrity.

    None of the above requirements are specific to construction. The principles of responsibility are the same for all acquisitions involving supplies and services and are explained in Subsection 5-5.7U.

14. Responsiveness Versus Responsibility.  In Sealed bidding, it is important to distinguish responsiveness from responsibility.  The apparent responsiveness of the bid is ascertained from the bid itself, not from extrinsic evidence or other information furnished by the contractor.

    In contrast, responsibility focuses on the bidder’s ability to perform as promised. Responsibility includes the bidder’s capacity, credit, experience, integrity, past performance and overall ability to perform.  If the bidder is a small business, the special determinations described in Subsection 5-5.5U also must be considered.

    The CO determines whether a bid is responsive to the solicitation.  The bidder, however, can protest such determinations to the agency or to the GAO.

15. Preaward Review and Approval.  When a construction award is being made on behalf of the IHS and the estimated value of the award (including option amounts) exceeds the authorized approval level, the Offices of Engineering Services (OES) must submit the proposed award to the Director, DCGP, IHS, for preaward review and approval.  This preaward review requirement applies to new contracts and modifications of existing contracts meeting or exceeding these thresholds except in the case of those priced options that were synopsized, evaluated, and reviewed by DCGP, at the time of contract award.

    Proposed awards must be submitted for review no later than fifteen working days--during normal working periods--prior to the expected award date, unless the cognizant CO justifies the need and arranges for an expedited review.

    In the case of construction awards made by IHS Awarding Activities Offices, the preaward review threshold is as stated in Exhibit 5-5.11-A “Preaward Review and Approval Levels by IHS Contracting Offices.”  This Area preaward review threshold is applicable to all types of Area construction awards, including Public Law 93-638 construction awards.

    This IHS preaward review and approval construction award policy supplements HHSAR 304.7101 and PHSAR 304.7101.

16. Preconstruction Conference.The contractor may be given Notice to Proceed (NTP) after all the contract documents have been prepared, the legal and other reviews have been obtained, the contract has been awarded, and performance and payment bonds and verification of insurance coverage have been obtained.  Frequently, however, it is valuable to hold a post award or preconstruction conference before the NTP is given.

    A preconstruction conference is an opportunity for the parties that will be directly involved in the contract to become acquainted. both personally and in terms of their roles, responsibilities, and authorities.  It is a good time to establish lines of communication and discuss issues that need to be clarified.

    Unless that authority is delegated to the PO, the CO has the responsibility to coordinate the preconstruction conference.  An agenda should be developed and a planning session held before the conference.  During the planning session, the chairperson for the conference should be selected and the participants’ roles and responsibility for responding to questions should be discussed.

    Those invited to attend should include the principal representative of the prime contractor, the prime contractor’s superintendent, a representative of each major subcontractor (if the prime agrees), a representative of the Tribal Employee Rights Office (if the construction project is on or near an Indian reservation), and such Government representatives as the CO and the PO feel are needed.

    A record of what is covered during the conference should be made and, at the conclusion, a copy should be furnished to all who attended.  They should review the record and advise of any additions. deletions. or disagreements they might have.  The record should be corrected accordingly, provided corrections are warranted.

17. Summary Chart:  Sealed Bid Construction.

    A summary chart that outlines the various steps in the IHS Sealed bidding construction contracting process is provided in Exhibit 5-5.11-B that follows.

5-5.12  AUTOMATED DATA PROCESSING AND TELECOMMUNICATIONS CONTRACTING

Note.  IHS acquisition of automated data processing and telecommunications equipment and services represents one of several procurement “special situations” for which special policies and procedures are prescribed.

Federal Regulations governing the acquisition of automated data processing and telecommunications equipment and services, as well as other Federal Information Processing (FIP) resources, are found in the Federal Information Resources Management Regulation (FIRMR) published as 41 CFR 201 and in the HHSAR Part 339.70.

These Federal regulations reflect the requirements of Public Law 92-582, which is commonly referred to as the “Brooks Act.”  The remainder of this Section of Chapter 5 is comprised of the text of IHM, Part 5 -- Management Services, Chapter 17 -- Acquisition of FIP Resources.

Acquisition of Federal Information Processing Resources

Table of Contents

1. Introduction
       Purpose
       Background
       Policy

2. Definitions
       Agency Procurement Request
       Delegation of Procurement Authority
       Federal Information Processing Resources
       Full and Open Competition
       Justification for Other than Full and Open Competition
       Requirements Analysis

3. Organizational Responsibilities
       Requestor or Project Officer
       Information System Coordinator
       Area Telecommunications Liaison
       Property Management Officer
       Area Security Officer
       Financial Management Officer
       Contracting Officer
       Office of Information Resource Management

4. Delegation of Authority
       The IHS Delegation of Procurement Authority
       The Delegation of the Area Directors (With the Exception of those Areas who have been Specifically Notified)
       General Guidance

5. Contracting Methods
       Small Purchase
       Sealed Bidding
       Contracting by Negotiation

6. Thresholds
       Up to $25,000 Open Market, Small Purchase
       Up to $50,000 GSA Non-Mandatory Schedule
       Over $25,000 Open Market - Sealed Bidding or Contracting by Negotiation
       Over $50,000 to Maximum Order Limitation

7. Acquisition Strategy
       Full and Open Competition
       Other than Full and Open Competition

8. Instructions for Small Purchases and Other Simplified Purchase Procedures
       Simplified Small Purchases
       Small Purchases for FIP Equipment and Software
       Small Purchases for Telecommunications Resources on GSA Mandatory Schedule or Open Market
       Contracts for all FIP Resources over $50,000

9. Request for Contract
       Sealed bidding
       Contracting by Negotiation

10. Preparing a Request for Contract (RFC)
        Program Requirements
        Statement of Work
        Requirements for a Contract Package
    

Manual Exhibit 5-5-17-A HHS 393, Purchase/Service/Stock Requisition

5-5.12  AUTOMATED DATA PROCESSING AND TELECOMMUNICATIONS CONTRACTING

1. Introduction.
   1. Purpose.  This section provides procedures and guidance for the Indian Health Service (IHS) staff to acquire Federal Information Processing (FIP) resources.  The FIP resources include automated data processing (ADP) equipment, telecommunications equipment, facsimile equipment, video conferencing equipment, ADP, and telecommunications software (see 5-17.2C, Definitions).  This chapter and the delegation of authority provided to the Area Directors July 28, 1994, provides the framework to procure FIP resources.  This guide is to be used by anyone in IHS who wishes to acquire FIP resources.  It provides a general overview of the process and requirements for contracting and information resource management personnel.
   2. Background.  The Brooks Act, Public Law (P.L.) 89-306 of 1965 established basic policy for the management of automatic data processing equipment (ADPE).  The General Services Administration (GSA) is responsible for the efficient, economic acquisition and utilization of FIP resources by Federal agencies and manages this process according to the Federal Information Resources Management Regulations (FIRMR).

      Federal agencies through FIRMR regulations, are given delegated procurement authority (DPA) to acquire FIP resources.  The DPA authority for all the IHS FIP resources has been delegated to the Associate Director, Office of Information Resources Management (OIRM).  Additional authority and responsibility has also been redelegated to the Area Directors of the IHS who may redelegate to the Area Information systems coordinators (ISC's).

      The following are other Federal laws, regulations, and directives that impact the acquisition of FIP resources:

      1. Competition in Contracting Act of 1984 (CICA) (P.L. 98-369);
      2. Computer Security Act of 1987 (P.L. 100-235);
      3. OMB Circular A-130, “Management of Federal Information Resources” and OMB Circular Number A-71, “Responsibilities for the Administration and Management of Automatic Data Processing Activities”;
      4. Paperwork Reduction Act, 1980 (P.L. 96-511);
      5. Privacy Act of 1974 (P.L. 93-579);
      6. Federal Acquisitions Regulation (FAR);
      7. Federal Information Resources Management Regulations (FIRMR) and Bulletins;
      8. Health and Human Services Acquisition Regulation (HHSAR);
      9. PHS Information Resources Management Manual (IRM);
      10. HHS IRM Circular #8, Agency Procurement Requests;
      11. Indian Self-Determination and Education Assistance Act (P.L. 93-638);
      12. Indian Self-Determination and Education Assistance Act Amendments of 1988 (P.L. 100-472);
      13. Buy Indian Act Authority (25 United States Code 47);
      14. FIRMR Bulletin C-35, Energy Efficient Microcomputers and Associated Computer Equipment.
   3. Policy.  It shall be the policy of the IHS that all FIP acquisitions comply with current applicable policies, laws, and regulations.

      Full and Open Competition and “Buy Indian” authorities must be used to the maximum practical extent.

      Areas shall not fragment requirements for FIP resources in order to circumvent established DPA thresholds.  Fragmenting is splitting requirements into several purchases to circumvent established thresholds.

      The Headquarters and Area program personnel shall coordinate their actions for each anticipated acquisition of FIP resources with their ISC.  The ISC is the Area and Headquarters main point of contact for FIP acquisitions.  The ISC coordinates the acquisition with the Area property management officer (PMO) and CO.

      The FIP requests should be reviewed for consolidation of resources, compliance with OIRM plans, and compliance with the regulations and guidelines set forth in this chapter.  The Associate Director, OIRM issues standards and policy guidance to the Area telecommunications liaisons and the ISC’s on the acquisition and implementation of FIP resources.  These policies also shall provide guidance regarding availability, applicability, and requirements for National contracts.

2. Definitions.
   1. Agency Procurement Request (APR)  -  The APR is a request for the granting of a DPA to acquire FIP resources.
   2. Delegation of Procurement Authority (DPA)  -  For small purchases, on the Standard Form HHS-393, the Area ISC or Associate Director, OIRM, approves the DPA authorizing the contracting officer to approve the acquisition.

      For a request for a contract (RFC), the DPA is a memorandum authorizing the purchase of a requirement within a specific dollar limitation, assigning responsibility and reporting requirements.

   3. Federal Information Processing (FIP) Resources  -  Any equipment or interconnected system or sub-systems of equipment that is used in the automatic acquisition, storage, manipulation, management, movement, control, display, switching interchange, transmission, and telecommunications equipment, software, services, support services, maintenance, and supplies.
   4. Full and Open Competition  -  Means that all responsible sources are permitted to compete.  The awarding of a contract is then made based upon the evaluated results of this vendor competition.
   5. Justification for Other than Full and Open Competition (JOFOC)  -  A justification explaining why only one responsible source can meet the requirement, or why only a specific make and model will satisfy the requirement.  Specific make and model specifications should be used if no other type of specification can satisfy the requirement.
   6. Requirements Analysis  -  A document that is prepared by the program which provides the basis on which the alternatives for meeting the requirements can be analyzed.  Each requirements analysis is documented commensurate with the size and complexity of the need (Refer to FIRMR 201-20.1).
3. Organizational Responsibilities.
   1. Requester or Project Officer.  The requester is the “initiator” of the procurement.  The requester is responsible for procurement related research and paperwork.  The PO is the program’s representative to ensure that program requirements are clearly defined and ensure that the contract is designed to specifically meet those requirements.

      POs establish quality standards, requirements, completion, and delivery schedules, as well as ensure that they are adhered to.

   2. Information System Coordinator (ISC).  Information System Coordinator (ISC) is the FIP resources technical representative within an IHS Area or Headquarters who is responsible for coordinating FIP resource requirements with the Office of Information Resources Management (OIRM).  The ISC is appointed by the Area Director or Associate Director Office at Information Resources Management as the person who can fulfill the requirements of this chapter.  The ISC is the information resources management (IRM) technical liaison between their Area and Headquarters and who maintains FIP records.

      In addition, to IRM management efforts, the ISC has the following specific responsibilities in support of ADP acquisitions.

      1. Participating in IHS FIP resources strategic planning as it relates to Area/Headquarters acquisitions.
      2. Reviewing and approving/disapproving FIP resource acquisition requests for conformance with IHS technical standards and the strategic and tactical plan submitted each year.  For FIP acquisitions, the request is reviewed by the ISC for compatibility with IHS FIP activities.

         For telecommunication acquisitions, the ISC obtains the concurrence of the Area telecommunications liaison and may require obtaining the concurrence of the Director, Division of Telecommunications Management (DTM), OIRM.

         Prior to submitting the request to the contracting office, the ISC ensures supporting documentation for each FIP request is complete.  This includes: verifying all necessary components of the system have been listed on the requisition; price/cost quote is mathematically correct; that the reference person identified on the requisition is the technical contact person, and that the salient characteristics outlined in the requisition, or in the acquisition package, accurately identify what is needed to meet the requirements.

      3. Maintain records on each acquisition.  Determine if resource can be acquired within the Area or forward to Headquarters East for processing.  The ISC is responsible for coordination of these records with the property management officer (PMO) so that the value of the property is recorded.

         Since FIP property may be obtained from National contracts as well as contracts within the Area, the ISC has the responsibility to work with the PMO to reflect that FIP property received in the Area (from National contracts, Area contracts, transfer of property, or Area purchases) are recorded as property.

         For delivery to the Areas from National contracts, there is no property transfer, the receipt of the property takes place in the Areas.  The PMO may not have signed the HHS 393 and may not be aware of the pending delivery.  In which case, the ISC is responsible to coordinate the acquisition with the PMO.  The ISC also has the responsibility to make these records available to the Area contracting officers and to OIRM.

   3. Area Telecommunications Liaison.  Area telecommunications liaison (ATL) works with the ISC and is responsible for managing all voice video, facsimile, or radio communications systems for all service units, hospitals, and health facilities within their assigned IHS Area boundary.  The ATL is responsible for coordinating the acquisition activity and obtaining the approval of Director, Division of Telecommunications, OIRM.
   4. Property Management Officer (PMO).  Property Management Officer (PMO) is responsible for ensuring that there is no excess property available within IHS that could fulfill the requirement being requested and for recording the property as it is received. As mentioned the PMO and the ISC shall work together on determining value and acceptance of FIP property.
   5. Area Security Officer.  Area Security Officer is responsible for ensuring that each acquisition request complies with IHS requirements for security, standards, and internal controls.  The security officer must determine the security level of each system requested before the ISC approves the procurement.
   6. Financial Management Officer.  Financial Management Officer is responsible for ensuring that the funds are available, verifies the appropriation numbers, CAN numbers, and the object classification codes.
   7. Contracting Officer.  The CO signs on behalf of the Government and is legally responsible for the contract.  They alone can take action to enter into, terminate, or change a contractual commitment on behalf of the Government.
   8. Office of Information Resource Management (OIRM).  Office of Information Resource Management (OIRM) is responsible to provide Agency-wide FIP resources oversight and guidance under the direction of the Associate Director.  The OIRM plans and implements major FIP acquisitions by utilizing staff from the OIRM’s Divisions.  The systems acquisitions staff, OIRM provides guidance for these acquisitions and provides or reviews alternatives.

      The DTM, OIRM, in Albuquerque, New Mexico, issues agency-wide telecommunications standards.  The DTM reviews and recommends approval/disapproval of major telecommunications acquisition requests for IHS and provides alternatives to the programs.

      The Division of Systems Management issues standards for resources and patient management software and hardware.

4. Delegation of Procurement Authority (DPA)
   1. The IHS Delegation of Procurement Authority:

      The following is a reiteration of the DPA’s and pertain to all FIP resources acquisitions including P.L. 93-638 contracts for the IHS Headquarters and Area Offices:

      1. For competitive acquisition of FIP resources, the delegated authority is $2.5 million.
      2. For noncompetitive acquisition of FIP resources, the delegated authority is $250,000.

      The above DPA is defined by HHS IRM Circular #8.

      The Area Directors have been redelegated a portion of this authority and may redelegate this to the ISC’s within their Areas.  The ISC will maintain control with appropriate records indicating what has been approved and procured.  Refer to Manual Exhibit 5.5-12-B for the current IHS Area authority and responsibility.

      For FIP resources acquisitions that exceed the above delegated authority level, (as stated in this Subsection), IHS officials will continue to seek specific acquisition delegations in accordance with existing GSA, HHS, and PHS Information Resources Management (IRM) policies. GSA approval is required when IHS is seeking authority to contract for FIP Services or FIP Support Services, and the total contract cost exceeds $2.5 million for competitive procurements, or $250,000 for non-competitive procurements, even if the Annual Contract Cost is not exceeded.

      With this increased authority comes the responsibility to comply with the applicable GSA policies, presented in the Federal Information Resources Management Regulations, HHS policies presented in the HHS IRM Manual and supplemented by the HHS IRM Circular series, and PHS IRM policies, presented in the PHS IRM Manual.  Compliance with all of these policies will be monitored through triennial reviews of the IRM programs of the IHS.

   2. General Guidance.

      Acquisition requests whose total dollar amount is more than the small purchase dollar limitation can not be broken down into several purchases that are less than the small purchase limit merely to permit purchase under small purchase procedures.

      All FIP resource acquisitions expected to exceed IHS' threshold shall be prepared for approval by HHS and/or GSA depending upon the dollar amount according to instructions in DHHS IRM Circular #8.

5. Contracting Methods.  The total dollar amount of the acquisition request and the specificity of the scope of work determines the appropriate method of contracting.  The requester must identify and justify each requirement and prepare the appropriate documentation and Government cost estimate.

   The following contracting methods are required for the acquisition of ADP and telecommunications supplies, hardware, software, support services, and maintenance:

   1. Small Purchase;
   2. Sealed Bidding;
   3. Contracting by Negotiation.
6. Thresholds.  Depending upon the total dollar amount and the method of procurement, different procedures are required.

   The following are the dollar thresholds:

   1. Up to $25,000 Open Market - Small Purchase
   2. Up to $50,000 GSA Non-mandatory Schedule - Small Purchase
   3. Over $25,000 Open Market - Sealed Bidding or Contracting by Negotiation
   4. Over $50,000 to Maximum Order Limitation (MOL) on GSA Non-mandatory Schedule  -  This shall be advertised in the Commerce Business Daily (CBD) as an intent to place an order against a GSA non-mandatory schedule.  A determination on how the requirements will be processed can be made after responses from the advertisement in the CBD are reviewed.

      If the requirement can be purchased from a GSA non-mandatory schedule at the lowest overall cost to the Government, an order will be placed against the non-mandatory schedule contract.

      If there were responses from the CBD that indicate the overall cost of the requirement can be acquired for less than the GSA non-mandatory schedule price on the open market, it will be processed as a sealed bid or a negotiated contract.

7. Acquisition Strategy.  A coordinated effort shall be made between the program, the ISC, OIRM, and the contracting officer to determine whether the appropriate acquisitions approach shall be through Full and Open Competition “Buy Indian” or Other than Full and Open Competition.  The preferred method is Full and Open Competition and “Buy Indian”.  For contracts subject to P.L. 93-638 regulations, the contracting officer will determine the appropriate acquisition approach.
   1. Full and Open Competition.

      Full and Open Competition is applicable when:

      1. At least two or more manufacturers’ products can satisfy the minimum requirements; or
      2. Requested FIP resources are described using functional specifications, equipment performance specifications, design specifications, software, and equipment plug-to-plug compatible functionally equivalent specifications, or brand name or equal specifications.
   2. Other than Full and Open Competition (JOFOC).

      The following are required for Other than Full and Open Competition (JOFOC):

      1. Application:

         JOFOC is applicable when:

         1. Only one responsible source can satisfy the requirement; or
         2. When only one specific make and model can satisfy the requirement.
      2. Format - Elements Required:
         1. For:  (Specify the Agency and contracting activity.)
         2. Purpose:  (Nature and/or purpose of the action.)
         3. Description:  (A description of the supplies or services required to meet the Agency’s need.)
         4. Authority:  (The identification of the statutory authority permitting other than full and open competition.)  (See 48 Code of Federal Regulations 306.3, FIRMR 201-39.601 and FAR 6.302.)

            Example: The statutory authority citation for specific make and model is 40 United States Codes 759(g) as amended by P.L. 99-500, FIRMR 201-39.601-3.

         5. Unique Qualifications:  (A demonstration that the proposed contractor’s unique qualifications or the nature of the acquisition requires use of the authority.)
         6. Other Sources:  (A description of efforts made to ensure that offers are solicited from as many potential sources as practicable, including whether a CBD announcement was or will be publicized. Include description of the market survey conducted and the result, or a statement of the reasons a market survey was not conducted.)
         7. Costs.
         8. Other Factor:  (Any other factors supporting the use of other than full and open competition.)
      3. Recommendations and Approvals for the JOFOC between $50,000 and $100,000.

         The following recommendations and concurrences are required for the JOFOC between $50,000 and $100,000:

         Concur:  PO’s Immediate Supervisor’s signature and date

         Concur:  Information Systems Coordinator’s signature and date

         Concur:  CO's signature and date

         Approval:  Principal Official Responsible for Acquisition (PORA)

      4. Recommendations and Approval of the JOFOC over $100,000.

         The recommendations and concurrences of the JOFOC over $100,000 are same as above, except the PORA would give concurrence and approval would be given by the Competition Advocate.

8. Instructions for Small Purchases and Other Simplified Purchase Procedures.
   1. Simplified Small Purchases.  Small purchases are generally used for acquisitions of $25,000 or less on the Open Market and $50,000 or less for non-mandatory GSA Schedule purchases.  The acquisition can be accomplished by using one of the following simplified small purchase procedures:
      1. Purchase Order:  A Fixed Price offer made by the Government to buy FIP Resources upon specified terms and conditions.  The purchase order does not become a contract until the contractor indicates acceptance.
      2. Imprest Funds (also known as Petty Cash Fund):  May or may not be used for specific purchases up to a specified threshold.  (Contact contracting office for additional guidance.)
      3. Blanket Purchase Agreement (BPA):  Is a simplified method of filling anticipated repetitive needs for supplies or services/maintenance by establishing “charge accounts” with qualified sources of supply. BPA’s are designed to reduce administrative costs in accomplishing small purchases by eliminating the need for issuing individual purchase orders.

         The use of a BPA does not authorize purchases that are not otherwise authorized by law or regulation.  The BPA is a method of implifying the making of individual small purchases and shall not be used to avoid the small purchase limitation of $25,000 open market or maximum order limitation for GSA Schedule items.  The contracting officer will provide the BPA guidelines.

   2. Small Purchases for FIP Equipment and Software.

      Small purchases for FIP Equipment and Software (Competitive or GSA Schedule and Noncompetitive).

      1. Requirements under $2,500:

         Prepare the HHS-393 as shown in Appendix A stating the need and how it will be used.  In addition, a brand of justification must be included as to why the brand being requested was selected or indicate "or equal" on the HHS-393 after the description (minimum requirements).  Indicate the GSA Schedule number if applicable.  Obtain internal approval signatures, i.e., requestor, property management, and funds availability, and submit to the ISC for processing.

      2. Over $2,500 and up to $25,000 Open Market and up to $50,000 GSA Non-mandatory Schedule (Federal Supply Schedule):

         Prepare the HHS-393 as shown in Appendix A, when an acquisition is greater than $2,500, but less than $25,000 (either on the Open Market or on GSA Schedule).  If the acquisition is between $25,000 and $50,000, the items must be on a GSA schedule to be processed as a small purchase.  The following items are required in these acquisitions:

         1. Requesting Office:  Is the originating office and organizational relationship.  Be sure to include the complete mailing address, contact person, and telephone number.
         2. Current Practices:  Briefly describe the methods and procedures currently used in accomplishing the activities performed.  Identify current problems that will be solved by acquiring new or additional resources.  Describe the present equipment and software being used, if applicable.
         3. Description:  Describe the information processing functions that must be performed.  Provide a specific description including all salient characteristics of the FIP resources required to meet the minimum needs.
         4. Justification and Anticipated Benefits:  Indicate how the requested information resources will be used.  If applicable, identify and associated hardware or software.  Identify the organizational area supported.  Specify Agency programs and/or projects that will be supported.  Describe the anticipated benefits.  Include benefits that could result in cost reductions, increases in work force productivity, and other benefits not measurable in dollar value.
         5. Alternatives:  Provide a comparison showing that an evaluation was performed of at least one other alternative and the alternative of choice is the most advantageous to the Government.
         6. Acquisition Strategy:  The acquisition strategy determination should be to fulfill the requirement, in the best interest of the Government.  Full and Open Competition is the most desirable method, however, there may be more restrictive requirements and in which case a JOFOC would be more appropriate.

            The following acquisition strategies are to be used:

            1. Cost/Brand Comparison:  When at least 3 different manufacture’s products can satisfy the minimum requirement, indicate the configuration required, the companies contacted, the brand quoting on, sales representative, telephone number, and the price for each.
            2. Brand Name or Equal:  Provide the salient characteristics of the brand name so that the procurement office can compete with brands with equal specifications.
            3. Specific Make and Model:  Provide a JOFOC if there is only one source that can fulfill the requirement, or only one specific make and model will meet the minimum requirement.  The procurement office will compete with different vendors that carry that specific make and model.
         7. Certification:  The following elements should be included in all procurement requests:

            I certify that the following criteria has been met in determining the need for the requested items:

            1. The items are absolutely essential to program needs.
            2. The items requested are the least expensive that will satisfy the need of the requesting program.
            3. The items meet initial use of replacement standards.
            4. There are no other items available, either from equipment pools or unrequired sources within the Area/Office that will meet the program needs.
            5. Staff is now or will be qualified to utilize the requested items.

               Area/Office Information Systems Coordinator

               ______________________________ _________
               Signature                                        Date

               ________________________________________
               Typed Name and Title

   3. For All Small Purchases for Telecommunication Resources on GSA Non-mandatory Schedule or Open Market.  The procedures are the same as Section 5-17.8B except:
      1. The Areas must have the Area Telecommunications Liaison approvals.
      2. Headquarters-West OIRM, Division of Telecommunications Management will review the request if it involves the procurement of a telephone system and forward the request to the Area ISC. The Area ISC will forward the request to the appropriate Contracting Office.

   4. Orders against GSA Non-mandatory Schedule Contracts for all FIP Resources over $50,000.  The HHS-393 is prepared along with the justification as indicated in Appendix No. 2 including the acquisition strategy, i.e., comparison of brands on GSA Schedule or JOFOC, and a technical description of the requirement.  This description will be incorporated in an announcement that will appear in the CBD to publicize the intent to place an order against a GSA non-mandatory schedule.

      If no capable sources respond within 15 calendar days after publication, a purchase order will be processed. If there are responses from capable sources, it may be necessary to proceed with a sealed bid or a negotiated acquisition.  NOTE: If it has been determined that a JOFOC is required, a separate signature page must be prepared.

9. Request for Contract.
   1. Sealed Bidding.

      Sealed Bidding is a method of contracting that employs competitive bids, public opening of bids, and awards.

      The following four conditions must exist if sealed bidding is used:

      1. Time permits the solicitation, submission, and evaluation of sealed bids.
      2. The award can be made on the basis of price and other price-related factors.
      3. It is not necessary to conduct discussions with the responding offerors.
      4. There is a reasonable expectation of receiving more than one sealed bid.  This determination is made by the CO.

         Since no discussions will be conducted, it is necessary that sealed bidding be prepared describing the Government's requirements clearly, accurately, and completely.

   2. Contracting by Negotiation.

      Contracting by negotiation is used when any of the four conditions allowing sealed bidding are absent.  Contracting by negotiation is a procedure involving the receipt of proposals from offerors, permits negotiations with the offerors, and usually afford offerors an opportunity to revise their offers before award of a contract.

10. Preparing a Request for Contract (RFC).  (Sealed bidding or Contracting by Negotiation)
    1. Program Requirements.  Once program requirements have been identified and defined, the PO should coordinate planning efforts with OIRM.  The requests for contracts (RFC) must be prepared by the program office for all proposed acquisitions submitted to the ISC and follow the format stated in the HHSAR Subpart 315.70.
    2. Statement of Work.  The statement of work (SOW) is the most critical document in the acquisition process.  It describes the work to be performed or the services to be provided; defines the responsibilities of the Government and the contractor; and provides an objective measure so that both the Government and the contractor will know when the work is complete and payment is justified.

       If the SOW does not clearly say what is required, many problems can arise in the award and management of a contract.  Ambiguous work statements can result in unsatisfactory performance, delays, disputes, and higher costs.  The SOW always describes the objective, purpose, nature, and detailed requirements of the work to be done.

    3. Requirements for a Contract Package (RFC).  The RFC package must contain the following:
       1. HHS 393.
       2. Acquisition Planning Document (APD):  For all new negotiated acquisitions whose system life costs are expected to exceed $100,000.  This should be done at the same time as an Agency Procurement Request.
       3. Agency Procurement Request:  The HHS IRM Circular #8 establishes the procedures to follow and an APR is required in IHS for any contract action over the small purchase thresholds.
       4. Delegation of Procurement Authority approval.
       5. Requirements Analysis:  The FIRMR Sub Part 201-20.1 prescribes the policies and procedures to follow in the preparation of the requirements analysis.
       6. Project Officer’s Certification Memorandum: The CO can provide this document.
       7. Justification for Other than Full and Open Competition (JOFOC): If applicable (see 5-17.7B).
       8. Statement of work.
       9. Evaluation Criteria:  The HHSAR 315.406-5(c) provides guidance for preparing the evaluation criteria.
       10. Schedule of Deliverables and Payments.
       11. Government Cost Estimate:  This is the Government’s assessment of the probable cost of the supplies or services to be acquired.  It analyzes the individual cost elements of the requirement.

       In addition to the FAR, FIRMR, IRM, and HHSAR, the HHS Project Officer’s Contracting Handbook provides guidance in the preparation of a RFC.

5-5.13  ACQUISITION OF HEALTH CARE SERVICES.

Note.  This Section of Chapter 5 concerns the acquisition of health care services commonly termed “contract health services.”  This Section is comprised of the text of the IHM, Part 2 -- Services to Indians and Others, Chapter 2 -- Acquisition of Health Care Services.  The text of this IHM Chapter follows.

Acquisition of Health care Services

Table of Contents

A.  Purpose

B.  IHS Policies

C.  Definitions

D.  Authorities and Oversight

E.  Alternate Resources

F.  Non-Personal Services

G.  IHS Payment Policy -- Reimbursement Rates for Health Care Services

H.  Exception Process for Pricing Exceeding That of the IHS Medicare Rate Ceiling

I.  Type/Source of Funding

J.  Types of Health Care Services/Supplies

K.  Sub-Object Class Codes Processed and Paid by the IHS FI

L.  Pricing Methodologies

M.  Responsibility Factors/Minimum Acceptable Qualifications of Non-IHS Health Care Providers

N.  Malpractice

O.  Types of Instruments to Purchase Health Care Services

P.  Publicizing Acquisition Actions

Q.  Non-Competitive Solicitations

R.  Types of Formal Agreements (Excluding Contracts)

S.  Use of Sealed Bidding Procedures (FAR Part 14 and HHSAR Part 314)

T.  Procedures for Contracting by Negotiation

U.  Evaluation Factors

V.  Special Standards of Responsibility -- FAR 9.104.2 (Responsibility Factors)

W.  Technical Evaluation

X.  Reasonableness of Price

Y.  Geographic Coverage

Z.  Use of Options

AA.  Contract Price Adjustments

BB.  Payment Guidance

CC.  Prompt Payment

DD.  Fiscal Intermediary

EE.  Contract Payment Disputes and Appeals

FF.  Administration

GG.  Expert Witnesses

HH.  Language for Medical Contract Instruments

5-5.13  ACQUISITION OF HEALTH CARE SERVICES.

1. Purpose.  This Section provides Indian Health Service (IHS) policies and procedures for the acquisition of health care services.  The IHS purchases health care services in two situations.  The first situation involves the purchase of health care services from non-IHS medical providers (e.g., facilities and medical professionals.)  The second situation occurs when the IHS arranges for non-IHS health care providers to deliver services in an IHS facility.
2. IHS Policies.
   1. The policy of the IHS is to acquire health care services by formal agreement when the following criteria are present:
      1. The required service cannot be supplied by government personnel in IHS facilities or by hire through normal Civil Service employment procedures, and
      2. The services to be obtained are determined to be non-personal in nature in accordance with Federal Acquisition Regulation (FAR) 37.1.
   2. It is the policy of the IHS to obtain health care services through the use of competitive procedures to the maximum extent practicable within the parameters of the IHS Payment Policy (Federal Register Vol. 51 No. 125, Monday, June 30, 1986, pages 23540-41).  See Section 7  --  Procurement Contracts -- General, of this Chapter, for additional information.
   3. The IHS is the "payor of last resort" for persons defined as eligible for contract health services notwithstanding any State or local law or regulation to the contrary (Federal Register Vol. 55, No. 28, Friday. February 9, 1990).  See Subsection 5  --  Alternative Resources, of this Section, for further information.
3. Definitions.  Definitions are provided to assist IHS personnel in understanding the terminology used in the health care industry and as applied throughout the IHS.
   1. Acute Care  - Short-term health care; a level of care that can be rendered only in a hospital.
   2. Admission  - A discrete episode of inpatient hospitalization.
   3. Allowable Costs  - Costs incurred by a provider in the course of providing services that are recognized as reasonable by the Indian Health Service or a third-party payor.
   4. Assignment (Medicare)  - Provider accepts the Medicare approved charge as payment in full.  Providers accepting assignment receive payment directly from Medicare.  When providers choose not to accept assignment, payment is sent directly to the patient.
   5. Average Length of Stay  - The average stay count, by days, of all or a class of inpatients discharged over a given period, calculated by dividing the number of inpatient days by the number of discharges.
   6. Bundling  - The practice of combining the services of different providers into one claim to a payer; in the case of Medicare, it currently includes combining services of non-physician providers inside and outside a hospital into the hospital claim, which is paid under one diagnosis-related group.  Bundling can also refer to combining multiple services into a single procedure, so that correct pricing can occur.
   7. Case Mix  - The categories of patients, classified by disease, procedure, method of payment, or other characteristics, in an institution at a given time, usually measured by counting or aggregating groups of patients sharing one or more characteristics; a relative measure of the complexity of the services required by each category of patients.
   8. Claim  - A billing or adjustment to such bill for payment submitted on the appropriate form or through a method of automated transmission developed for direct entry into the Fiscal Intermediary’s (FIs) claim processing system.
   9. Contract Health Services (CHS)  - Health services provided at the expense of the IHS from public or private medical, or hospital facilities, or providers other than those of the IHS or those funded by the IHS.
   10. Conversion Factor  - A monetary multiplier that converts relative value units into payment amounts.
   11. Cost Outlier  - A patient whose cost of treatment exceeds a provider-specific amount of the Medicare rate for the diagnosis-related group into which the patient is assigned.
   12. Cost-to-Charge Ratio  - The proportional relationship of third-party payer allowable costs to total providers charges applied to total operating costs in a hospital operating department for cost-finding purposes.
   13. Covered Services  - Those services and supplies provided by the Hospital or other provider, which are benefits payable under an IHS contract or purchase order.
   14. Day Outlier  - A case in which the length of stay exceeds the upper threshold length of stay for diagnosis-related group.
   15. Diagnosis  - Descriptive term of the patient’s condition, which is coded according to the International Classification of Diseases, 9th Revision, Clinical Modification.
   16. DRG  - An acronym for the Medicare Diagnosis Related Group which is a classification of clinically homogeneous admissions having approximately the same resource intensity.  A DRG is determined based on diagnostic and other information that is available on the claim, using the Medicare DRG methodology.
   17. DRG Weight  - An index number that reflects the relative resource consumption associated with each diagnosis-related group.
   18. Disproportionate Share  - An add-on to Medicare reimbursement rates reflecting additional costs incurred by providers who serve a significantly disproportionate number of low income patients and/or significant number of Title XVIII patients.
   19. FAR  - Federal Acquisition Regulation.  The primary regulation used by all Federal agencies in the acquisition of supplies and services.
   20. Fee Schedule  - A listing of fees or allowances for specific medical procedures, which usually represents the maximum amounts that the IHS will pay for specified procedures.
   21. Fiscal Intermediary (FI)  - A plan, private insurance company, or other public or private agency selected by IHS to pay claims.  The authority for a fiscal agent is contained in the Consolidated Omnibus Budget Reconciliation Act of 1985, Public Law 99-272, Section 17003:  ”... provides authority for the Secretary of the Department of Health and Human Services to contract with fiscal agents to perform claims payment, processing and audit functions with respect to services purchased on a contract basis by the Public Health Service...   Fiscal agents must either be entities which could qualify as carriers for Medicare purposes, or Indian tribes or tribal organizations acting under Indian Self-Determination Act contracts.  While the fiscal agents need not be Medicare carriers, they must meet the same requirements as Medicare carriers regarding efficiency and effectiveness of operations, surety bonds, and financial controls.”
   22. Formal Agreement  - Refers to contracts, rate quotes, purchase orders, or other methods of determining IHS payments for medical services.
   23. Grouper  - A computer software program that uses clinical and other information to classify cases into the proper DRG.
   24. HCFA  - An acronym for the Health Care Financing Administration.  HCFA is the agency of the Federal Government responsible for administering the Medicare and Medicaid programs.
   25. HHSAR  - Establishes uniform acquisition policies and procedures for HHS which conform to the FAR.
   26. IHS Facility  - A facility that is operated, owned, leased, or donated to the Indian Health Service and contains space which is primarily for IHS use to provide direct and/or contract clinical treatment services to eligible Indian consumers.
   27. IHS Beneficiary  - A person eligible for benefits, as determined by the Indian Health Service.
   28. Interim Rate  - The Medicare Periodic Interim Payment (PIP) programs pays providers an interim amount based on expected costs.  A settlement process after the year-end determines final payment amounts.  Similarly, an outpatient interim “cost-to-charge” ratio is used to price outpatient services until the final cost-to-charge ratio is determined during a retrospective settlement process.
   29. Length of Stay  - The number of calendar days that elapse between a patient’s admission and discharge; determined by subtracting the admission date from the discharge date.
   30. Locum Tenens  - A person providing professional services who is temporarily taking the place of another.
   31. Medicare Fee Schedule (MFS)  - The payment system for provider services (Medicare Part A & B).  The payment amount is determined on a relative value scale that has components for work, practice expense (excluding malpractice), and malpractice expense.  The sum of the Relative Value Unit (RVU) is multiplied by the conversion factor to calculate the payment amount.
   32. Medicare Part A  - The hospital insurance program portion of Medicare which automatically enrolls all persons aged 65 and over entitled to benefits under the Old Age, Survivors, Disability, and Health Insurance Program or Railroad Retirement; all persons under 65 who have been eligible for disability for more than two years; and insured workers and their dependents needing renal dialysis or kidney transplantation.
   33. Medicare Part B  - This is a voluntary portion of Medicare which includes physician services in which all persons entitled to Part A may enroll on a monthly premium basis.
   34. Medically Necessary Services  - Those services or supplies provided by a hospital, a physician, or other provider of health care services, to diagnose or treat an illness or injury which is:
       1. Consistent with the symptom or diagnosis and treatment of the condition, disease, ailment, or injury;
       2. Appropriate with regard to standards of good medical practice;
       3. Not primarily for the convenience of the patient, their physician, or other provider;
       4. The most appropriate supply or level of service which can be safely provided to the patient; and
       5. Approved by IHS.

       When applied to a patient admitted as an inpatient to a hospital, it further means that the patient's medical symptoms or condition require that the services or supplies being provided cannot be safely provided to the patient outside of the acute care inpatient hospital setting.

   35. Non-Participant Physicians (NON-PARs)  - Physicians who treat Medicare beneficiaries but do not have a legal agreement with Medicare to accept assignment on all Medicare services.  NON-PARs may choose to accept Medicare assignment on a claim-by-claim basis.  NON-PARs are paid 95% of the Medicare-approved charge, and can also bill the patient up to the “limiting charge”.
   36. Ordering Officials  - Those persons that the responsible IHS Contracting Officer has designated, in writing, with the authority to issue purchase-delivery orders under a contract.
   37. Outlier  - A patient having either an extremely long length of stay or extraordinarily high billed charges when compared with most patient discharges classified in the same diagnosis-related group.
   38. Outlier Payments  - Additional revenue for day or cost outlier additions resulting from services rendered to Medicare patients.
   39. Participating Physicians (PARS)  - Physicians who sign an agreement with Medicare to accept assignment for all Medicare services provided to beneficiaries for the duration of the agreement, usually a year.  PARs accept and receive 100% of the Medicare approved charge or fee schedule amount as payment in full (may not bill the balance to the patient).
   40. Pass-Through  - A cost which is not subject to screens, ceilings, limits, or caps and is excluded from prospective payment calculations.  The IHS FI calculates and pays the pass-through amount with the DRG payment, not retrospectively as Medicare does.  These amounts are derived from the latest settled Medicare cost reports.  The following are examples of pass- throughs as defined by Medicare:
       1. Capital Pass-through  - A retrospective cost-based capital reimbursement system of Medicare Part A for such costs as interest and depreciation expenses.
       2. Cost Pass-Through  - A retrospective reimbursement based on reasonable cost of the Medicare Part A prospective payment system of capital-related costs, and direct medical education costs that are excluded from the definition of inpatient or operating costs.
   41. Per Diem  - The maximum daily payment allowed for all inpatient hospital services rendered to a patient under a contract.
   42. Provider  - Any hospital, physician, or medical services organization which provides services for IHS patients.
   43. Relative Value Unit (RVU)  - Unit of measure designed to permit comparison of the relative amounts of resources required to perform various services, by physicians or other providers, within a single department or between similar departments in various hospitals, by assigning weight to such factors as personnel time, level of skill, and sophistication of equipment required to render service.
   44. Resource-Based Relative Value Scale (RBRVS)  - A valuation or rating system of medical services on the basis of relative resource inputs consisting of work and other practice costs to provide medical services.
   45. Responsibility Factors or Special Standards of Responsibility  - Factors to be considered when specialized experience or qualifications are needed for adequate contract performance.
   46. Sole Community Provider  - A hospital that, or physician which, by reason of factors such as an isolated location or absence of other providers, is the sole source of services reasonably available to beneficiaries in a geographic area.
   47. Unbundling  - The practice of billing for related services separately.  Example:  billing separately for removal of the uterus and each ovary rather than billing for a total abdominal hysterectomy, or when a physician orders an automated panel of laboratory tests to be performed on one blood sample, but bills as if each of the tests was performed separately.
4. Authorities and Oversight
   1. Authority to execute health services contracts is vested in the contracting officer (CO).

      The CO (or duly authorized negotiator) is the IHS official who is responsible for issuing solicitations; conducting or coordinating cost and price analysis; conducting or controlling all negotiations concerning cost or price; technical requirements; other terms and conditions; and selecting the source for contract award.  These activities are conducted with advice of the technical evaluation team, the PO, and, other IHS staff members who may be called upon to assist the CO in the conduct of negotiations.  See also the FAR Part 13, the HHSAR Part 315, and Section 3 of this Chapter for further discussion.

   2. Purchase delivery orders for health services may only be executed by individuals who have received delegations of authority to do so from the Senior Contracting Officer for the Area.  The Area Contracting Office is responsible for performing oversight to ensure that these purchases comply with Federal and Health and Human Services (HHS) acquisition regulations and IHS policies and procedures, and for working with the ordering official and service unit to correct any deficiencies identified in this oversight.
   3. Delegation of Authority to Non-Acquisition Personnel
      1. Non-acquisition personnel are defined as those individuals not classified in the Procurement classification series, 1101, 1102, 1105, and 1106.
      2. Only the Senior Contracting Officer or Principle Official Responsible for Acquisition (PORA) may delegate CO responsibilities to non-acquisition personnel.  This authority may not exceed the small purchase limitation for open market purchase.
      3. Non-acquisition personnel shall be delegated only the minimum necessary responsibilities, in a written delegation from the Senior Contracting Officer (SCO).
      4. Non-acquisition personnel are required to have the training, experience, and education requirements for the responsibilities assigned, prior to the delegation.  Such personnel shall have a Level 1 DHHS certification.
5. Alternate Resources.  The IHS is the “payor of last resort” for persons defined as eligible for contract health services notwithstanding any State or local law or regulation to the contrary.
   1. The IHS is a residual resource and not an entitlement program.  In accordance with 42 CFR 36.61, IHS is the payor of last resort for individuals eligible for contract health services.  As a result, payment for services provided to patients is not authorized to the extent that the patient is (1) eligible for an alternate resource (e.g., Medicare, Medicaid, private health insurance, worker’s compensation, medical payments provisions in automobile or homeowners insurance policies, third party liability), (2) would be eligible for an alternate resource if he/she applied for it, or (3) would be eligible for an alternate resource under State or local law or regulation if he/she were not an IHS beneficiary.
   2. When a patient is potentially eligible for an alternate resource, the non-IHS provider(s) is (are) responsible for assisting him/her in completing application forms necessary to receive the benefit.  In addition, it is the non-IHS provider’s responsibility to bill all applicable alternate resources.
   3. If an alternate resource is available, its use is required and IHS or the Fiscal Intermediary (FI) shall be promptly notified of any payment received.  The FI shall pay the IHS patient liability amount for medical and dental claims involving alternate resources (third-party payers) as follows:
      1. The IHS patient liability amount is defined as the amount for which the patient is held responsible after the primary resource(s) have been paid, less any IHS disallowed charges for services not authorized or covered by the IHS.
      2. The contractual or regulatory restrictions or limitations imposed by the primary resource(s)/payer(s) will apply in determining the IHS patient liability amount.  The IHS patient liability amount shall not exceed the amount which would have been paid by the IHS had IHS been the only payer.
      3. The IHS patient liability amount is considered as the remaining balance of allowable charges after all alternate resource(s)/payer(s) have been paid, except in instances in which the provider is obligated by regulations or by contract with the primary payer(s) to accept the primary payer(s) payment as payment in full, e.g., in Medicare and Medicaid cases, payment by the federal or state agency may constitute payment in full.  If there is no IHS liability for payment, no further payment shall be made.
      4. If a Contract Health Services (CHS) provider is being paid through CHS funds for services performed in an IHS facility, the FI will not coordinate benefits if the IHS facility bills the primary insurer directly.

      The IHS or designated FI will reject claims where it has reason to find a failure to investigate other party liability.

6. Non-personal Services.
   1. Before a contract, purchase order, or other payment arrangement is developed, a determination must be made in accordance with FAR 37.103 and Health and Human Services Acquisition Regulation (HHSAR) 337.103 that the services acquired are nonpersonal in nature, meaning that either no employer-employee relationship exists, or that the direct supervision aspects of the relationship can be minimized to where they are incidental to the services required and are for administrative guidance only.  Per HHSAR 315.672(1)(9), a statement that the services are nonpersonal in nature must be included in the negotiation memorandum.
   2. Each contract shall state that:
      1. The contract is a nonpersonal services contract, as defined in FAR 37.101, under which the contractor is an independent contractor; and
      2. Government may evaluate the quality of professional and administrative services provided, but retains no control over the medical professional aspects of services rendered (e.g., professional judgments, diagnosis for specific medical treatment).
7. IHS Payment Policy- Reimbursement Rates for Health Care Services.
   1. The purpose of the IHS payment policy (See Federal Register Vol. 51 No. 125, June 30, 1986, pages 23540-41) is to conserve funds by purchasing health care services for beneficiaries only from those medical facilities, physicians, and other health care providers who agree to accept, as payment in full, reimbursement at rates no higher than the prevailing Medicare allowable rates (including deductibles and co-payments).
   2. It is recommended that IHS establish contracting priorities by identifying high volume providers.  Competitive processes will then be used to negotiate the most favorable rates available within the Medicare rate ceiling.  The policy is not intended to restrict the IHS to Medicare rates when more favorable rates may be negotiated.
   3. Medicare reimbursement methodologies, are the preferred method of pricing hospital inpatient, outpatient, provider services, and medical supplies, whenever agreement can be reached on that basis.  When such agreement cannot be reached or achieved, the available pricing alternatives are identified in Subsection 12.
   4. The use of alternative payment methodologies other than Medicare methodologies, must be justified in the contract file by demonstrating that the estimated total charges would result in lower charges than those anticipated under the Medicare methodologies.  (See Section 8 which addresses the procedures to use when the prices are greater than Medicare Rates.)
8. Exception Process for Pricing Exceeding That of the IHS Medicare Rate Ceiling.  Prior to purchasing health care services at rates higher than prevailing Medicare allowable rates, the following exception procedures shall be followed:
   1. Contracts and Other Recognized Formal Agreements: Written approval must be obtained, on a “case-by-case” basis, from the Director, IHS to award a contract or formal agreement which establishes reimbursement at rates higher than prevailing Medicare allowable rates.  For example a provider may offer pricing which exceeds their Medicare rate:  a discount off billed charges or percentage above Medicare rates.

      Prior to award of the contract or formal agreement, the Area/Associate Director of the respective IHS Area Office shall submit a written request containing a program narrative to the Director, IHS.  The program narrative shall contain the circumstances requiring award to the specific provider and a comparison of the rates offered to the Medicare rate, by using data obtained from the FI.  Award of these contracts should normally be restricted to those situations where the provider is the only acceptable provider in the geographic area, and it will be absolutely necessary to use their services on a recurring basis.

   2. Open Market CHS Purchase Orders: Approval must be obtained, on a “case-by-case” basis, from the IHS Service Unit Director authorizing the use of a non-contract provider.  An IHS physician, designated by the IHS Service Unit Director, must document and recommend that services from the particular non-contract provider are justified under the circumstances.  The IHS physician’s recommendation must identify the cost of the services.
9. Type/Source of Funding.  The source of funding to be used is determined by the nature of the contract.
   1. CHS funds may be used to pay for health services provided in non-IHS public or private medical facilities or by providers other than those of the IHS or those funded by the IHS.
   2. If Hospitals and Clinics (H&C) funds are not available, CHS funds may also be used to support direct care services (e.g., specialty clinics, locum-tenens, outside radiology, and laboratory services).
   3. If H&C funds or third party resources (e.g., Medicare/Medicaid funds) are not available, CHS funds may be considered as an optional source of funding to purchase non-physician health care services that are required to maintain direct care services (e.g., nurse anesthetists).
   4. The current CHS funding is two-year funding.  Funds appropriated by the Congress in the one fiscal year do not have to be obligated until the end of the next fiscal year.
   5. H&C funds are used to pay for direct services in an IHS facility.  H&C funds are one-year funds and can be used to pay for contract health services.
   6. The IHS has other sources of funds to pay for medical services (Medicare/Medicaid reimbursements and other program funds -- e.g., alcohol program).
10. Types of Health Care Services Supplies.  The following list provides examples of the categories of health care services and supplies that can be purchased from the private sector.
    1. Acute care hospital services:
       1. Inpatient;
       2. Outpatient;
       3. Emergency Room;
       4. Professional Services (facility based professional providers, e.g., Emergency Room physician).
    2. Free-standing outpatient facility services (e.g., urgent care center, ambulatory surgical center).
    3. Professional health care provider services:
       1. IHS Facility (on-site):
          1. Locum tenens (full or part time);
          2. On Call services;
          3. Specialty Clinic services (e.g., podiatrist, rheumatologist);
          4. Clerkship/Residency/Fellowship rotations (benefit of Government);
       2. Non-IHS Facility (off-site):
          1. Physician services;
             1. Inpatient;
             2. Outpatient (free standing facility);
             3. Private Office.
          2. Dental professional services.
          3. Non-physician/non-dental professional services (e.g., podiatry, physical therapy, optometry) --
             1. Outpatient (free standing facility);
             2. Private Office.
    4. Patient Transportation:
       1. Emergency Medical Transportation (Ambulance):
          1. Air;
          2. Ground.
       2. Non-Emergent:
          1. Common Carrier;
          2. Private Carrier.
    5. Reference Medical Laboratory Services.
    6. Extended Care Facility:
       1. Skilled Nursing Facility (Medicare Approved);
       2. Psychiatric Inpatient Facility;
       3. Physical Rehabilitation Facility;
       4. Alcohol & Drug Rehabilitation.
    7. Consumable Medical & Surgical Supplies:
       1. Prosthetics and Appliances;
       2. Dental Laboratory Services;
       3. Pharmaceuticals;
       4. Eye Glasses;
       5. Hearing Aids.
    8. Durable Medical Equipment.
11. Sub-object Class Codes Processed and Paid by the IHS FI.  Refer to Manual Exhibit 5.5-13-A for a listing of those sub-object class codes paid by the IHS FI Sub-object class codes not listed in the exhibit are normally paid by the respective Area Finance Office.
12. Pricing Methodologies.  There are several methods for establishing price schedules for the anticipated contract or purchase order.  Examples of reimbursement methodologies are listed below, on which pricing may be based for facility and provider formal agreements.
    1. Facility Charges;
       1. Medicare Methodology;
       2. Percentage of Medicare Methodology;
       3. Per Diem;
       4. Percentage of Billed Charges.
    2. Providers:
       1. Medicare methodology;
       2. Percentage of Medicare Methodology;
       3. Per Diem;
       4. Percentage of Billed Charges;
       5. Clinic Fee/Per Day/Per Clinic.
13. Responsibility Factors/Minimum Acceptable Qualifications of Non-IHS Health Care Providers.  The IHS is responsible for ensuring that the health care services to be purchased, either under contract, recognized formal agreement, or open market, will be provided by a non-IHS health care provider who meets the following minimum acceptable qualifications.
    1. Acute Care Hospital:
       1. Fully state certified/licensed to deliver services within the state.
       2. HCFA Certification.

          OR

       3. Accreditation/certification by another organization granted “deemed status” by HCFA for this purpose, e.g., JCAHO (Joint Commission on Accreditation of Healthcare Organizations), AOA (American Osteopathic Association).
          1. It is understood that many small rural facilities may not be accredited due to size or funding limitations.  In those cases, HCFA certification of the facility is acceptable substitute.
          2. In rare instances a hospital is neither accredited or HCFA certified.  Generally those facilities are used for urgent or emergent care only.  Valid state certification is required, and the quality of care provided by those facilities must be assessed and monitored by IHS personnel.
       4. Medical liability insurance.
    2. Professional Providers:
       1. Graduation from an accredited professional school;
       2. Certification and state licensure;
       3. Required specialty training;
       4. Required clinical practice experience;
       5. Hospital affiliation or ability to obtain;
       6. Medical liability insurance.
14. Malpractice.
    1. Services provided by physicians and other providers in Federal Government operated facility under contracts are not generally covered by the Tort Claims Act.  Only Government employees are covered by the Act.  Therefore, when services must be obtained on an individual contract or purchase order, it must be realized that the individuals providing such services are responsible for providing their own malpractice insurance.
    2. When physician hospital, or other provider services must be obtained by contract rather than by temporary Government appointment, the provider shall maintain medical malpractice insurance in an amount consistent with local practice and the contract (purchase order) provisions throughout the entire period of performance.
    3. Contract/Purchase Order Provisions.
       1. The contract shall include FAR clause 52.237-1, Indemnification and Medical Liability Insurance.  This FAR clause requires that contractors maintain their own malpractice insurance in amounts consistent with local practice.  (The dollar value(s) of standard coverage(s) prevailing within the local community as the specific medical specialty, or specialties concerned, or such higher amounts as deemed necessary to protect the Government’s interest, is inserted.)
       2. The contract must contain a statement that the contractor shall promptly notify the IHS Project Officer in the event of a malpractice suit or action involving an IHS patient.  Further, the provider/facility shall authorize IHS representatives to collaborate with counsel for the insurance carrier in settling or defending such claims when the amount of the liability claimed exceeds the amount of the coverage.
    4. It is the responsibility of the PO to determine the amount of malpractice insurance necessary for each contract, whether for CHS or on-site personnel (per occurrence).
15. Types of Instruments to Purchase Health Care Services.
    1. Contracts.
       1. Indefinite Delivery Contracts.
          1. Frequently the IHS’s acquisition needs cannot be fully defined at the time of contract award.  Uncertainties in quantity and price and the exigencies of time dictate entering into contracts with certain specifics completed during the contract period.  The IHS is unable to define how much of a service or item it requires at specific times when entering into the contract.  Indefinite delivery contracts have no set quantity and/or no set delivery schedule.  There are three types of indefinite delivery contracts:  (1) definite quantity-indefinite delivery, (2) requirements, and (3) indefinite quantity contracts.
             1. Definite quantity -- indefinite delivery contracts are where the Government agrees to buy, and the contractor agrees to sell, a set amount of a service or item for a fixed period with deliveries to be scheduled upon order (FAR 16.502).
             2. Requirements contracts provide the Government activity with the specific supplies or services they need during the contract periods (FAR 16.503).  Requirements contracts are needed for anticipated recurring requirements, where the precise quantities needed during the contract period cannot be predetermined.
             3. Indefinite quantity (guaranteed minimum) contracts provide for an indefinite quantity, with stated limits of specific supplies or services to be furnished during the contract period (FAR 16.504).
          2. When indefinite delivery solicitations are to be used to obtain necessary services the CO should consult with appropriate program/project personnel to determine if multiple awards are practicable.  All solicitations, however, must specify that delivery orders for patient treatment will be made on the basis of medical, geographical, and other program and price considerations as determined at the time the order is placed.
          3. Requirements contracts for the acquisition of CHS normally result in multiple awards.  Whenever multiple awards are made, they must be closely monitored to ensure that orders placed against such contracts conform to good contracting practices with proper consideration given to differences in provider costs, in addition to concerns such as geographic locations, available hours, continuity of service, etc.
          4. Where two or more Area/Program Offices use a single provider for hospital services, annual use estimates shall be furnished by all users to the Program Office in whose Area the hospital is located and a single contract shall be awarded for all IHS needs Each Area Office submitting an estimate shall be provided the contract number and any EIN numbers which apply to the contract.  Area COs shall distribute this information to all appropriate Service Units.
          5. Multiple awards should not be made to a single provider for a variety of services (i.e., a contract with a hospital should provide for all services contemplated from that hospital inpatient, outpatient, etc., rather than a separate contract for each service).
    2. Purchase-Delivery Order and Related Forms.  Purchase-Delivery Order forms are multipurpose forms designed for the following uses:  (1) negotiated open market purchases of supplies or services not in excess of the small purchase limitation, and (2) a delivery order for ordering or scheduling deliveries against established contracts.  Ordering officials shall ensure that delivery and purchase orders clearly state the services ordered and provide a best estimate of the charges anticipated.  Examples of these forms and their uses are described below:
       1. PHS-347 Order for Supplies or Services.

          This is the appropriate instrument for acquiring non-patient specific services and supplies, i.e., services: on-site specialty clinics, hiring of individuals to perform direct health care services in government facilities; supplies: infant car seats, bicycle helmets, diabetic test kits.

          The PHS-347 form is normally issued and signed by acquisition personnel or by individuals who have been delegated the authority to use this form by the Contracting Officer.

       2. CHS Purchase-Delivery Order for Health Services, Form IHS-T-843-1A.

          Note:  Other CHS Purchase-Delivery Order forms (Purchase Order for Contract Health Services Other Than Hospital Inpatient or Dental, IHS-64-1A; and Purchase/Delivery Order For and Report of Contract Dental Care IHS-57-1A) are in the process of being phased out and will eventually be replaced with the IHS-T-843-1A.

          The CHS-Purchase-Delivery Order is the instrument to be used to provide a timely and efficient method of obligating government funds, ordering, and authorizing the provider to render health care services.  CHS delivery orders and purchase orders are to be issued before services are provided, except in emergency situations wherein notification of services provided occurs within 72 hours, or within 30 days for the elderly and disabled.  This satisfies the contracting principle that an order is an offer by the government to a provider to buy certain services, and that a contract is formed when the provider accepts the offer.

          It is the policy of the IHS to use the forms listed above as follows:

          1. CHS Delivery Orders.
             1. When issued against an existing contract, the form is referred to as a Delivery Order.  The contract’s terms, conditions, and clauses apply rather than those cited on the reverse of the provider’s copy of the form.  This is the preferred use of this form and application should be maximized.  Separate delivery orders should be issued for each individual patient, except as provided for in this IHS guidance concerning blanket and multiple orders.
             2. Each delivery order issued against a contract must cite both the contract number and the delivery order number in the appropriate blocks on the form.  When used as a delivery order under a contract, there is no dollar limitation on each order or modification to each order, except as established by the total estimated amount of the contract or as otherwise restricted by the CO in his/her delegation of authority.
             3. Each order placed under a provider agreement or BPA must cite the provider agreement number as well as the delivery order number in the appropriate blocks on the form.  All delivery orders issued against provider agreements shall be issued to the lowest cost provider for the required services, to the extent such an approach is considered to be within program requirements, patient needs, geographical considerations, etc.  Orders issued under provider agreements shall not exceed the small purchase limitation per order.
          2. CHS Purchase Orders.
             1. When not issued against an existing award instrument this is considered an open market purchase and the form is referred to as a Purchase Order.  The conditions and clauses cited on the reverse of the provider’s copy of the form apply.  Separate purchase orders should be issued for each individual patient, except as provided for in this IHS guidance concerning blanket and multiple orders.
             2. The dollar limitation on the total value of each open market order including modifications (supplements) shall not exceed the small purchase limitation.
             3. The ordering official signing the open market order cannot exceed their signature authority delegated by the Area CO.  In situations where there is no official at the ordering location with an appropriate delegation, the purchase order and all modifications/supplements must be forwarded to the Area Contracting Office for signature.
             4. When an open market order requires a modification/supplement that increases the total order amount above the delegated authority of the ordering official, the modification/supplement to the order must be signed by an official whose delegated authority exceeds the total of the purchase order and all modifications/supplements.
          3. The CHS Purchase-Delivery Order (PDO) is not the authorized award instrument for purchasing the following:
             1. Obtaining residence/fellowship programs.  These programs shall be acquired through Cooperative Agreements issued by the Contracting Office and shall be approved no lower than by the Area Director.
             2. Specialty health care services to be performed on-site in Government facilities (e.g., radiology services, podiatry clinics).  If the service is considered a repetitive need and the annual amount exceeds the small purchase limitation, these services must be obtained through a contract.  If the amount is less than the small purchase limitation, a PHS-347 Order for Supplies or Services form is the proper instrument.  Competition is ensured and both instruments are normally issued by acquisition personnel.
             3. Hiring of individuals to perform direct health care services in a Government facility.  This category includes health services for which the Government is unable and/or it has been determined impracticable to recruit.  This also occurs where the patient load does not warrant the assignment of full-time personnel and/or there are needs for short-term replacements to cover leave, training, illnesses, or meeting attendance away from duty station.  If the service is considered a repetitive need and the annual amount exceeds $25,000, these services must be obtained through a contract.  If the amount is less than $25,000, a PHS-347 Order for Supplies or Services form is the proper instrument.  The instruments are the appropriate way to obtain these services and ensures competition.  Both instruments are normally issued by acquisition personnel.
             4. Miscellaneous health services, supplies, and services required to support health services (not incidental to treatment of a specific patient).  Example:  Purchasing diabetic test kits in bulk for stock.  These services and/or supplies should normally be purchased by use of the PHS-347 or contract.
    3. Memorandums of Agreement.  [Memorandums of Agreement (MOAs) and any other instrument except those provided for in the Grants and Cooperative Agreement Act are specifically prohibited for any use in connection with obtaining health services or related requirements under this guidance.]
16. Publicizing Acquisitions Actions.
    1. COs shall publish a synopsis in the CBD for each category and type of service expected to exceed the small purchase limitation requirement.
       1. The synopsis shall advise of the specific Government needs and intent to contract for health care services, to include the geographical location of the services, estimated number of patients, types of services involved, notice of possible multiple awards if applicable, estimated period of performance, and options if applicable.
       2. Synopses issued by IHS must notify prospective offerors of the IHS policy regarding the use of Medicare allowable rates for hospitalization or individual provider services.
       3. IHS synopses, made on an annual basis, may also notify prospective offerors that awards may be made on an open continuous basis as long as Medicare methodologies are used for award pricing.  In addition, provider services to be obtained under blanket provider agreements shall use an annual requirement synopsis to solicit additional sources.
    2. All providers of the types of services required, located in the geographical area where services are to be obtained, shall be forwarded a copy of the solicitation.  Copies of the solicitation will also be provided to any other requestors who are responding to the synopsis in accordance with FAR 5.102.
    3. Where acceptable, responses are expected to be minimal.  COs are encouraged to supplement each synopsis by publishing requirements in newspapers, medical periodicals and/or journals, and contacting local professional associations and Governmental health agencies to obtain increased responses.
    4. All contract awards shall be synopsized in accordance with FAR Part 5.
17. Non-Competitive Solicitations.
    1. Although many factors such as medical necessity, emergency medical care, lack of medical resources, isolated and culturally unique patient populations, and a variety of Federal, State and local standards may affect the availability of health services -- competitive solicitation and award processes shall be used to the maximum extent possible.
    2. Noncompetitive acquisitions should generally be limited to only those situations where services required by a particular patient can only be rendered satisfactorily by a particular provider uniquely qualified by education, training, experience, licensure (where applicable), and/or charter in a particular field of endeavor.
18. Types of Formal Agreements (Excluding Contracts).
    1. Blanket Orders.
       1. Blanket Orders, which merely obligate funds for a specific timeframe are prohibited.
       2. Blanket Delivery Orders may be issued against indefinite delivery contracts which specifically authorize providers to treat a specific category of patients who present themselves to a facility or provider.  Blanket Delivery Orders must set maximum dollar or patient limits, cannot exceed 30 days per order, and must require the provider to submit the appropriate information for each patient treated.
       3. A Blanket Purchase Order (PHS 347) may be issued to a provider to cover all patients treated during a single clinic when the CO is unable to negotiate a fixed price per clinic under a formal agreement.  In such cases the provider must submit the appropriate information and report separately for each patient treated.  COs shall review historical purchase data with their program personnel to determine repetitive use of open market purchase orders and every attempt should be made to award formal agreements for such services as appropriate.
    2. Provider Purchase Agreements.
       1. Area contracting offices should solicit provider agreements from all potential providers in an Area whose estimated annual usage is known, and in which the provider will be offering a broad array of services on an “as needed” basis.
       2. An annual CBD notice should be used to increase the number of potential providers and every effort must be made to identify and offer agreements to all responsible providers to ensure the requirements of FAR 13.204(d) are met.
       3. When several potential providers are available and some have traditionally provided services in excess of $25,000 per year and some under $25,000, a standard competitive solicitation should be issued.  The solicitation should notify offerors that, based on the evaluation of proposals, a provider agreement will be issued in lieu of a contract award whenever potential usage is estimated to be $25,000 or less.
       4. Provider agreements may be continued for up to five (5) years when the review requirements of FAR 13.205 are complied with.  However, annual attempts must be made to provide for additional agreements with new providers.
    3. Rate Quotation Methodology.  This alternate acquisition methodology is currently being tested at three IHS Areas.  Determination will be made, upon completion of the pilot, whether this methodology will be implemented throughout the IHS.
    4. Blanket Purchase Agreements.
       1. A blanket purchase agreement, though not a contract, is a written understanding negotiated by the parties containing specifics on all possible terms and clauses that apply to future orders between the parties during the contracting (ordering) period.  It also contains, as specific as practicable, a description of supplies or services needed and methods for pricing, issuing, and delivery of future orders.
       2. Since a BPA is not a contract, there is not a promise that the IHS will place any order, so the “contractor” may withdraw from the agreement, up to the time an order is placed.
       3. Unlike requirements and indefinite quantity contracts, competition must be obtained before issuing each order under a BPA.  (If the Government, however, determines competition is impracticable, i.e., only one source is available, further competition may be dispensed with if adequate justifications are obtained.)
       4. Repetitive services (other than hospital services) and supplies shall be obtained under Provider/Blanket Purchase Agreements (BPAs) hereafter referred to as provider agreements.  The issuance of a BPA with a dollar limit in excess of the small purchase limitation is not in violation of the FAR, however, no individual order shall exceed the small purchase limitation under FAR 13.204(b).  Each BPA must state a Not To Exceed amount that is consistent with the usage of the BPA.
       5. When review procedures are used in accordance with FAR 13.205 these agreements may be issued for periods of performance up to five (5) years.
       6. No accounting or appropriation data needs to be contained in the agreement itself, however, contracting activities will ensure that funding is available prior to placement of orders.  This may be accomplished by either of the following methods:
          1. BPAs for prescriptions or provider services which use individual prescriptions as orders or oral ordering procedures should use “bulk funding” as defined in FAR 13.101.  Annual or quarterly bulk funding should be provided on a Purchase/Service/Stock Requisition Form 393.
          2. Blanket/Provider agreements using written orders will include funding on each order identical to the methods used for indefinite-delivery type contracts.
       7. Repetitive physician provider services shall be obtained under provider agreements.  Provider agreements must be bilateral and must be issued by centralized contracting staff (IHS Area Offices only) in accordance with the following:
          1. Provider requirements must be synopsized in an annual CBD announcement.
          2. IHS provider agreements must reflect provider acceptance of reimbursement at rates which do not exceed Medicare allowable rates (see Sections 3 and 4).
          3. Provider Agreements should be issued to all providers in a geographical area who request an agreement and indicate an acceptance of reimbursement at or below Medicare methodologies.
          4. Delivery orders must be issued on IHS form T-843-1A as appropriate, while adhering to the requirements of FAR 13.204.

             Telephone orders may be used but must include the order number and be confirmed by written deliver order within 72 hours.

          5. All appropriate provisions of this guidance are applicable to provider agreements as well as contracts.  Outpatient prescription services are best covered through use of BPAs with pharmacies located in close proximity to patients.  Prescriptions issued for eligible patients may be used as orders against these BPAs.
19. Use of Sealed Bidding Procedures (FAR Part 14 and HHSAR Part 314).
    1. Sealed bidding procedures are normally not appropriate for the competitive solicitation of most medical services, and competitive negotiation procedures should be used to obtain the necessary health care services.
    2. Miscellaneous health services, defined in paragraph C below, and supplies and services required to support health services have often been successfully acquired using sealed bidding procedures to obtain price competition from responsible sources. In such circumstances use of this methodology is preferred and should be used whenever feasible and practicable (see FAR 6.401).
    3. Miscellaneous health services, supplies and services required to support health care are generally defined as diagnostic aids, ancillary health services, and supplies not incidental to treatment of a specific patient.  They may include, but are not limited to the following: laboratory services; eye examinations; the manufacture and fitting of eyeglasses and dentures; some ambulance services; etc.
    4. If sealed bidding is used, the CO must document the contract file, stating why this method of acquisition is suitable for the requirement.
20. Procedures for Contracting by Negotiation
    1. The nature of the majority of health care services acquired by the IHS often require discussions with responding offerors (e.g., hospitals, physicians) concerning fee schedules, times and days of services, and other factors.  In addition, isolated geographical locations for required services often make it difficult to receive more than one offer.  Often the lack of bidding experience causes a high percentage of bidders to be non-responsive.  Competitive negotiation procedures should be used to obtain necessary health care services.
    2. The IHS has determined that there are two levels of competitive negotiated procedures that may be used for the solicitation of proposals for the acquisition of medical services.  It is the responsibility of the Program Office, with the guidance and concurrence of the CO, to determine the level of competition applicable to a given requirement.  This information should be incorporated into the Request for Contract (RFC) package.  They are as follows:
       1. The first is the traditional formal technical evaluation which is used when quality and technical aspects are of critical importance.  Generally, this method is used when one award is to be made.
       2. The second method is when proposals are solicited on the basis of special standards or responsibility.
    3. Where the competitive negotiation processes are applied, requests for proposals may use varying technical and price combinations depending on circumstances as follows:
       1. When technical excellence is the major concern, substantive evaluation criteria, over the basic responsibility factors, must be developed.
       2. In such situations offerors will be evaluated primarily on technical factors rather than costs.  Only one award is normally made to the highest technical offeror, unless projected patient load is estimated to exceed provider capacity or there are geographic limitations.
    4. All IHS solicitations for CHS must notify potential offerors that Medicare allowable rates are the preferred method of determining eligibility for award.  Offerors who propose rates which are determined to exceed Medicare allowable rates will not be eligible for award except as noted in Section 4.
21. Evaluation Factors.
    1. It is the responsibility of the Program Office, with the guidance and concurrence of the CO, to develop evaluation factors applicable to each acquisition.  (See FAR, Part 9).
    2. Hospital Evaluation factors:
       1. Factors to consider when drafting evaluation factors (the PO should have a good idea of the potential contract facilities that are available to service the population):
          1. Is the hospital Medicare Participating facility?  [If so, all Medicare numbers, including those of sub-providers and distinct part units, should be requested.]
          2. Does the hospital accept Medicaid patients?  [If so, list all Medicaid numbers, including those of sub-providers. Distinct part units should be requested.]
          3. Is the hospital fully accredited (AOA)?  [If not fully accredited, describe its status].
          4. If the hospital is not JCAHO accredited, why?  [Ask for a brief description of their programs and policies on Provider Credentialing, Quality Assurance Programs, and Discharge Planning.]
          5. Is the hospital fully certified by the State to deliver hospital services within the State?  [If not fully certified, describe its status.]
          6. Does the hospital have current Medical Malpractice Insurance?  Is it self insured? [Ask the amounts, policy expiration date, and medical malpractice insurance carrier .]
          7. Proximity to beneficiaries.
          8. Past performance in agency/Federal contracts.
          9. Facilities and equipment.
          10. Experience with beneficiary population.
          11. Is a team response required, e.g., air evacuation, trauma team, transplant team.
       2. Sample Evaluation Factors:
          1. State licensed or accredited.
          2. HCFA certified.
          3. JCAHO or AOA certified.
          4. Medical liability insurance.
          5. Past performance.
          6. Geographic location.
          7. Adequacy of personnel/staffing.
    3. Providers.
       1. Factors to consider when drafting evaluation factors for providers. As a reminder, the requirements for bringing a provider to an IHS facility are somewhat different than contracting for CHS referral services:
          1. Location of the service required.  Will the service be delivered in an IHS facility (e.g., emergency room physicians, nurses) or will patients be referred to a CHS provider?
          2. Type of medical specialty needed.
          3. Is the provider a Medicare participating practitioner?
          4. Does the provider have Medicare "New Physician" status (number of years health care practitioner has furnished professional services for payment under Medicare Part B)?
          5. Does the provider agree to accept Medicaid patients?
          6. What admitting/staff privileges are required? Does the provider have them?
          7. What type of professional certification is required?
          8. What are the educational requirements (e.g., for the specialty)?
          9. Which state does the provider need to be licensed in to provide the necessary services?
          10. Which specialty(s) is the provider Board certified in?
          11. Is medical malpractice insurance required, and in what amount?
          12. Is a Drug Enforcement Agency (DEA) license required?
          13. If a contract will be awarded to provide the direct delivery of health care services in an IHS facility, is credentialing needed for that occupation?  At what point in the contracting process does the credentialing need to happen?
          14. Proximity to beneficiaries.
          15. Past performance in agency/Federal contracts.
          16. Office, facilities, and equipment.  What does the provider need to have on-site?
          17. Experience with beneficiary population.
          18. Is a team response required, e.g., Air evacuation, trauma team, transplant team.
       2. Sample Evaluation Factors:
          1. Professional Education.  Graduate of a professional school accredited by a nationally-recognized body, appropriate for the member’s professional discipline.
          2. Post-Graduate Training.  Offerors must provide evidence of additional specific or program-pertinent training.
          3. Required specialty training.  Offerors must provide evidence of additional specific or program pertinent training in appropriate specialty.
          4. Required clinical practical experience.  Quality and quantity of offeror’s past and current clinical experience in this specialty, in addition to required responsibility factors.
          5. Hospital affiliation or ability to obtain.
          6. Professional certification and licensure.
          7. Professional affiliations.
          8. Suitability:
             1. Professional liability claims and judgments made against the provider.
             2. Previous denial or revocation of medical staff membership at another facility.
             3. Previous reduction, suspension, revocation, voluntary relinquishment, or non-renewal of privileges at another facility.
             4. Problems with alcohol or drug abuse.
             5. Previous loss, suspension, restriction, denial, or voluntary relinquishment of professional licensure or professional society membership.
             6. Health status.
             7. Revocation or suspension as a Medicare or Medicaid provider.
             8. Professional liability cancellation within the past five (5) years.
             9. DEA licensing investigations or actions.
             10. More than five (5) percent ownership of any medical facility, joint ownership or medical service, or equipment with a facility to which patients may be referred.
          9. Experience with patients to be served.  Offerror's past and current professional experience dealing with American Indians and Alaska Natives and/or experience in providing services on a reservation or in remote locations.
          10. Proximity to patients.  Distance and travel time (either for the patient to travel for treatment or for the physician to arrive on-site at an IHS facility).
    4. The solicitation must specify whether paramount consideration will be given to technical proposals, cost, or price.
    5. Generic Evaluation Factors For Negotiated Procurements.
       1. Technical Proposal:
          1. Technical Approach --
             1. Understanding of problem.
             2. Unique problem solving approaches (e.g., innovation, creativity).
             3. Response to sample questions.
             4. Special resources and tools.
          2. Management Approach --
             1. Appropriateness of organizational structure and staffing mix.
             2. Management control, reporting, and cost control/schedule systems.
             3. Subcontract management plan.
          3. Corporate experience --
             1. Quality of reference checks, especially with respect to work of a similar or related matter.
             2. Experience in projects of comparable scope and complexity.
             3. Experience in high quality, demanding projects.

             4. Experience in similar operational and technical environments.
          4. Personnel --
             1. Key technical, specialized personnel, and staffing plan.
             2. Comparable past experience.
             3. Academic credentials and special training.
             4. Quality of reference checks.
             5. Access to specialized talent elsewhere in company or within multi-contractor organization.
             6. Use of technical advisors/consultants/experts.
22. Social Standards of Responsibility -- FAR 9.104-2 (Responsibility Factors).
    1. When acquiring health care services, special standards of responsibility may be used.  Solicitation(s) may be issued using only those special standards of responsibility (responsibility factors) necessary for award.  When the application of formal evaluation criteria by a technical evaluation panel will have little effect on the quality of services, but the solicitation must be flexible enough to negotiate rates, dates, hours of performance, and other items, it is appropriate to use responsibility factors.  Generally you are concerned with personnel, financial responsibility, and the facility.
    2. Responsibility factors work by acceptance or rejection of an offeror based on the ability to meet the special non-negotiable standards (go/no-go).  Failure to meet the special standard(s) automatically disqualifies the offeror from receiving an award.
    3. It is the responsibility of the Program Office, with the guidance and concurrence of the CO, to determine the special standards of responsibility applicable to each acquisition.  The suggested strategy is to always be aware of type of facility or type of discipline needed.
    4. Multiple awards.
       1. Multiple awards are encouraged when using the special standards of responsibility.  This is in order to establish formal contractual relationships with as many providers as possible in a geographic area where there is a potential for referral.
       2. When the provider meets the special standards of responsibility, acceptance of Medicare Methodologies, or price, as applicable, then becomes the paramount factor in determining awards, and such awards should be considered for all providers in a geographical area with whom there is a potential for referral.
       3. Orders placed against such contracts conform to good contracting practices with proper consideration given to differences in provider costs, in addition to concerns such as quality, geographic locations, available hours, continuity of service, etc.
    5. Single Competitive Award.

       If the intent is to award only one contract, then Section M of the solicitation must clearly state that if all offerors meet the special standards of responsibility, then award will be made on the basis of lowest overall price.

23. Technical Evaluation.
    1. Competitive requests for proposals may be solicited on the basis of either (1) basic responsibility criteria or (2) a formal technical evaluation where quality and technical aspects are of critical importance.  The decision as to which technical level of competition is applicable to a given requirement is necessarily the responsibility of the program/project office.  However, the advice of the CO should be sought and provided to ensure a well conducted and appropriate decision.
    2. Technical Evaluation for Solicitation with Special Standards of Responsibility.
       1. Those offerors who meet all responsibility criteria need only be identified by the program office, in writing, as acceptable.
       2. When an offeror fails to meet the special standard of responsibility, the PO must provide a written explanation of which factor or factors the offeror fails to meet.  A procedure akin to a preaward survey may be instituted to verify the qualifications of the offerors.
    3. Formal Technical Evaluation.
       1. In recognizing that technical evaluations of competing health professionals involve the exercise of medical discretion and judgment, we note that it is a somewhat subjective process.
       2. When a single award (or multiple awards) will be made to the best technically qualified facility or provider, formal technical evaluation criteria must be developed and incorporated in the RFP and applied in the technical evaluation.
       3. The solicitation should make it clear to all offerors that the selection will entail the exercise of discretion and judgment by the technical evaluation panel in using the evaluation factors listed, to measure and assess the merits of the proposals received.
       4. The technical evaluation panel shall include medical specialist’s proficient in the subject matter of the solicitation.  The PO may choose to be a voting member of the technical evaluation panel.
       5. A technical evaluation report must then be prepared and furnished to the CO by the chairperson of the technical evaluation panel and maintained as a permanent record in the contract file.  This report shall reflect the ranking of the offerors and contain a narrative to document the evaluation and assessments which resulted in such rankings (see HHSAR 315.608).
       6. It is required that the solicitations for such services list the evaluation factors that will be considered in the order of their importance.
       7. In addition, the relative importance of price to technical requirements must be clearly stated in accordance with HHSAR 315.406-5(c)(4)(iii).
    4. Offeror’s proposal preparation instructions to be included in the RFP are required when the intent is to make award on the basis of formal Technical Evaluation Criteria.
       1. General Instructions - are to be included in the RFP and may be found in HHSAR 315.406-5(b)(1)(i).
       2. Technical Proposal Instructions - detailed guidance concerning the contents of the technical proposal instructions is not presented here.  Examples of general statements may be found in the HHSAR 315.406-5(b)(2).
       3. Business Proposal Instructions - examples of suggested instructional language for the business proposals may be found in HHSAR 315.406-3.
24. Reasonableness of Price.
    1. Contracts Awarded Using Medicare Payment Methodologies.
       1. Facilities (in-and out-patient).  If there are two or more hospitals within close proximity or reasonable geographic distance to each other, the service unit is obliged to choose the lower priced facility provided, if it is equal in other ways (e.g, quality; services).  Another consideration is where the IHS physicians have hospital privileges, if applicable.
       2. Professional Providers.  Providers are considered equal if they are at Medicare reimbursement rate or another pricing methodology that is equal to Medicare.
       3. Others (e.g., ambulance).
       4. A fair and reasonable price is one which is fair to both parties to the transaction, considering promised quality and delivery, and probability of the seller producing as promised.  The price established by the Health Care Financing Administration (HCFA) for services rendered, either by a medical facility or a health care provider, is considered to be a price set by regulation.  The processes established by HCFA are sufficient to establish the price.  The IHS FI will be obtaining each hospital’s Medicare Cost Report information from the HCFA Public Use Files upon receipt of contract information.  This information will be used in the payment methodology.
    2. Contracts Awarded Based On Pricing Other than Medicare Payment Methodologies.
       1. Certified cost or pricing data is required for all contracts expected to exceed $100,000, except in rare instances (see FAR 15.804-2 and 15.804-3).  Contract audits are required for all negotiated contracts which exceed $500,000, except where the information available to the CO is considered adequate to determine the reasonableness of the proposed cost or price (See FAR 15.805-5).
       2. Offerors or contractors for solicitations anticipated to exceed $100,000 must submit certified cost and pricing data.  In addition, COs must require prospective contractors to perform a price analysis and/or cost analyses if required by FAR 15.805.1.  The CO is responsible for comparing the stated estimated cost against the actual cost of any previous year’s contract.  If the solicitation is for services not previously provided under contract, the contracting officer shall perform and document a market survey to substantiate the stated anticipated dollar threshold provided by the requesting office.
       3. Certified cost data, pricing data, and contract audits are used by COs to develop negotiation strategies and to determine the lowest and best price.  The CO is required to document why a contract audit was not obtained, and if an audit was obtained, any actions taken based on audit recommendations.  For non-competitive contracts, allowable costs include items such as salaries, fringe benefits, medical journals, professional dues, malpractice insurance, and other direct costs.
    3. Contracts for Providers Located On-Site in IHS Facilities.
       1. For provider contracts, all contract files must contain cost comparison data to justify the salaries of full time employees reflected in the proposed contract.  Comparison sources should include historical data, local hospitals, medical school affiliates (if any), and published data sources like the Association of American Medical Colleges.
       2. The contract price must be negotiated on the actual salary of those individuals providing the services.  If the salaries of the individuals to provide the services are not known before the contract is awarded, the median salary shall be used.
25. Geographic Coverage.  The project officer shall provide the contracting staff with the location of where services are to be provided and/or the population to be served. If more than one Area is using the contract, the appropriate Area to issue the contract is the Area where the facility is located.
26. Use of Options.
    1. Inclusion of option years in contracts for health care services is strongly encouraged.  The CO has the authority to award up to four (4) pre-priced 1-year options in addition to a base year for the contract in accordance with FAR 17.2.
    2. Each option year shall be pre-priced as a separate line item (or line items) including those using Medicare Methodologies.
27. Contract Price Adjustments.  Contracts may use price adjustments to increase pricing as follows:
    1. Increases in Medicare allowable rates or other rates set by IHS of State edict can be automatically added to the contract whenever the Medicare methodology is amended or an amended IHS or State rate structure is approved, as long as the following statement is incorporated in the contract for IHS or State rates:

       Economic Price Adjustment - Prices Set by Regulation [Use for Medicare IHS, or State rates set by regulation];

       Fee schedules set by HCFA, IHS, or State edict will be automatically adjusted upon receipt of the regulatory changes in such schedules by the CO or by the FI handling payment.

    2. Priced options may be exercised in accordance with FAR 17.1 and HHSAR 317.2.
    3. If the CO is unable to negotiate Medicare allowable rates, IHS, State rates, or priced options, then the Economic Price Adjustment clause of 52.216-4 (in accordance with FAR 16.203(c)) may be used. When used, contractor proposed rate increases should be closely checked to ensure that they are appropriate.  Consideration should be given to the following:
       1. FAR clause 52.216-4, Economic Price Adjustment Labor and Materials, does not specifically address the type of services awarded under this instruction, however, the clause provides adequate latitude for evaluating increases in the costs of medical care.  This clause should only be inserted in medical service contracts containing option periods of performance where contractors will not agree to definitively priced options for the option years and the ability to increase prices during the life of the contract is required.
       2. When clause 52.216-4 is used, additional guidelines should be established at the time of negotiations and documented in Section H of the contract.  These guidelines should consist of a comprehensive description of conditions covering increases for fees.  Increases may be tied to national standards (such as the Consumer Price Index, HRSA Medical Reimbursement Rates, and standard industry rates such as Blue Cross/Blue Shield), regional or state economic indicators, or may be negotiated on individual data furnished by the contractor.  Review and analysis assistance may be obtained from the cost advisory branch analysts.  In any event, the contract must state in Section H which elements of cost (e.g. labor, malpractice insurance) are subject to an economic price adjustment.
       3. The following clause should be included in Section H, for rates other than those set by regulation:

          Economic Price Adjustment -  Rates Not Set by Regulation

          Requests for changes in the fee schedule shall be made in accordance with clause 52.216-4.  Acceptable data for negotiation of contractors request for change shall consist of, but not be limited to, the following:

          1. Changes in the Consumer Price Index of at least __________%.
          2. A cost and pricing proposal meeting the requirements of FAR 15.8 which adequately identifies the changes in cost and their effects on the contractor's existing fee schedule.
       4. FAR 16.203-3 provides that the CO must make a determination that the economic price adjustment is necessary either to protect the contractor and the Government against significant fluctuation in labor or material costs or to provide and adjustment in the event of changes in the contractor's published prices.
28. Payment Guidance.
    1. The use of Medicare allowable rates for CHS is the preferred method of award and its use should be maximized.  Payment for services not covered by Medicare allowable rates shall be determined separately by the FI.  [Indian beneficiaries should not, under any circumstances, receive any supplemental billings for services rendered.]
    2. Payment schedules set by IHS or State edict may be used as the basis for award and payment.  Whenever rate methods/schedules set by IHS or State agencies are used, the contract must state “In accordance with the attached schedule of fees issued by (insert governmental agency) dated____________________________ and subsequent amendments thereto, as authorized, approved, and published.  In states where prescribed fee schedules are merely maximum rates (ceiling) which may be charged, these fee schedules should be used only as a base for negotiation of acceptable rates.
    3. All contracts awarded on a basis other than (A) or (B) above, or a percentage thereof, must specify the payment method or fee/rate schedule to be used by the contractor.  Payments to the contractor should relate the services to the definite time element when the period of performance can be adequately measured and controlled such as training conferences and daily clinics.  However, payments to the contractor on a "fee basis" may be established without relating the services to be performed to a definite time element when necessary, such as patient visits and consultations.  COs are cautioned, however, to avoid the use of time and materials or labor hour contracts for health services unless absolutely necessary.  Such fee schedules should be completed using prevailing rates in the local areas involved as the test for reasonableness.
    4. IHS award instruments shall require providers to submit their claims for payment to the designated billing office (IHS FI or Area Finance).  These claims must include a completed Medicare Claim Form 1450, 1500, or UB92, as appropriate, and be attached to the form (Purchase-Delivery Form) used to authorize the care.
    5. Providers shall be notified to submit their claims for payment directly to the FI after receipt of the explanation of benefits (EOB) form from alternate resources.
    6. The 30 calendar day prompt payment period will begin when an invoice, supported by evidence that all alternate resources have been billed and payment therefrom has either been obtained or finally denied, is submitted to the FI or the IHS.  Accordingly, the invoice shall request payment for only those charges which have not been paid by appropriate alternate resources.
    7. Professional Health Care Services:

       When reimbursement is made under the Medicare pricing methodology, the Medicare Physician Fee Schedule (implemented by HCFA on 1/1/92) will be applied by the IHS FI to claims for IHS patients as directed by the IHS.  In the infrequent event a Medicare fee does not exist for service, IHS, using data provided by the FI, will establish an "IHS allowable amount" in lieu of the Medicare Fee Schedule.

       1. HCFA's Common Procedure Coding System (HCPCS)
       2. For hospitals that extend a percentage discount from billed charges or from Medicare rates for all categories of services, the IHS FI will apply the percentage discount and calculate the amount of the payment.
    8. Inpatient Facility Services:

       When reimbursement is made under the Medicare DRG methodology, the entire amount of the payment will be calculated by the IHS FI.  The "pass-through" portion of the payment will be calculated by dividing the total annual "pass-through" costs in the most recent settled Medicare Cost Report for the Hospital by the annual number of Medicare discharges identified in that report.  For hospitals with Fiscal Years ending after 10/1/91, the pass-through will include only non-capital related reasonable costs.

29. Prompt Payment.  NOTE:  The payments the FI processes were initially exempt from the Prompt Payment Act.  IHS can no longer exempt itself from complying with the Prompt Payment Act and is currently working with the FI to bring IHS into compliance.  All other claims for health care services which are processed and paid by the respective Area Finance Office are not exempt from the Prompt Payment Act.
    1. All claims and invoices presented by providers of health care services shall be paid in accordance with the Prompt Payment Act, 31 U.S.C. 3901, et seq., and its implementing policies and procedures contained in OMB Circular No. A-125.
    2. Interest shall be paid on late payments in accordance with the requirements of FAR 32.9.  In particular, the specified interest shall be paid when the payment occurs more than 30 days after a proper invoice has been received.  Or, in the case of payments made by the FI, when payment occurs more then 30 days after a provider has submitted a “clean” claim.
    3. Cost reimbursement contracts are not subject to payment of interest under the Prompt Payment Act.
30. Fiscal Intermediary.
    1. Notification upon contract award.  Upon contract award, exercise of an option, or other modifications that effect the term or price of the contract, the CO must immediately provide to the FI [the current contractor is Blue Cross/Blue Shield of New Mexico, IHS Contract Health Services, P.O. Box 13509, Albuquerque, NM, 87192-3509], the following minimum information:
       1. Provider/Contractor name;
       2. EIN or SSN to be used on purchase order (plus suffix if appropriate);
       3. Contract/modification number;
       4. Effective date of the contract/modification;
       5. Ending date of the contract/modification;
       6. Pricing methodology;
       7. Pricing methodology rate(s);
       8. Flexible pricing instructions;
       9. Any special considerations or comments;
       10. Contracting Area Office contract (name, address, phone number);
       11. Contracting Officer Signature;
       12. * Provider address - billing and physical (for verification only);
       13. * Provider phone number and name of contact person;
       14. * Level of care authorized for dental services (if appropriate);
       15. * Provider type or specialty;
       16. * Medicare Provider Number (multiple);
       17. * Provider's Medicare Fiscal Intermediary and/or carrier;
       18. * Medicare Participating status;
       19. * Provider Signature.

           * Information obtained by Area from provider.

    2. A copy of the provider contract should NOT be routinely sent to the FI.
    3. It is imperative that the FI receive any subsequent modifications to the contract that affect price or contract terms to ensure accurate reimbursement.  Correct Payment depends upon the accuracy of this information.
    4. The FI is responsible for initial administrative remedies to resolve payment disputes for claims that it has processed for payment.
    5. The IHS FI will obtain each hospital’s or physician’s Medicare information from HCFA upon receipt of contract information.  This information will be used in the Medicare based payment methodologies.
    6. Area Contracting staff must notify Area Contract Health Service and Service Unit staff of contract criteria so that the correct contract information (contract numbers, EINs, suffixes, etc.) can appear on the purchase delivery orders.
    7. The FI will provide the Area with a Contract Confirmation Letter or Contract Extension Letter upon receipt and successful entry of a contract.  Area staff should review the confirmation letter to ensure the contract information was entered correctly.
    8. Proper Sub-Object Class Codes used by the FI.
    9. Claims Submission:
       1. All claims must be submitted with an IHS Purchase-Delivery Order (PDO) or indicate the PDO number if the PDO is submitted electronically.
       2. Claims for inpatient and outpatient facility services must be submitted on a HCFA 1450 claim form using Medicare guidelines and must indicate the full billed charges for the services rendered.  This includes claims for payment at Medicare rates or at a per diem rate.
       3. Claims for professional services must be submitted on a HCFA 1500 claim form using Medicare guidelines and must indicate the full billed charges for the services rendered.
       4. If a patient has Alternate Resources, the Provider must submit a copy of the Explanation of Benefits form with the PDO and the claim.
31. Contract Payment Disputes and Appeals.
    1. When a contract or purchase order provides for administrative processing and payment of provider claims by a FI, the following procedures shall be used to address payment disputes:
       1. The FI shall be responsible for administrative remedies to resolve payment disputes that may result from the FI determinations, and to adjudicate payment complaints and disputes from all parties.
       2. When FI administrative remedies are not sufficient to resolve the dispute with a provider, the provider/contractor can submit a claim to the awarding Area CO in accordance with the disputes clause of the contract or purchase order.
    2. When a contract or purchase order provides for processing and payment of invoices by the Area, the following procedures shall be used to address payment disputes:
       1. The CO, with PO concurrence, shall attempt to resolve payment complaints and disputes between the contractor/provider and the IHS.
       2. When the CO is unable to resolve the dispute, the provider/contractor can submit a claim to the CO in accordance with the Disputes Clause of the contract.
    3. The administrative remedy for resolving contract disputes arising under the contract or purchase order is the Contracts Disputes Act and the Disputes Clause.  The implementing clause, FAR clause 52.233-1.  Disputes, shall be incorporated by reference in every contract or purchase order.
32. Administration.
    1. Section H of the solicitation and the resultant contract(s) shall contain a detailed description of the monitoring procedures used by the IHS to ensure contract compliance.  These procedures must be able to demonstrate that the services called for under the contract have been received.  After contract award, any incidents of noncompliance as evidenced by monitoring procedures, or other information, shall be forwarded immediately to the CO.
    2. Contract performance monitoring is the responsibility of the PO.
    3. A summary evaluation of contractor performance, based on compliance or noncompliance of contract requirements, shall be forwarded by the PO to the CO prior to exercising any option year.
33. Expert Witnesses.  Contractors may not serve as “expert witnesses” in any suit against the Federal Government.  Language to this effect is to be included in the contract.
34. Language for Medical Contract Instruments.
    1. General.  Non-IHS health care providers must comply with the following IHS policies/procedures/guidelines.
       1. Many of the IHS patients receiving services may only speak a native language and/or reside on a Native American Reservation.  The provider is expected to demonstrate sensitivity to cross-cultural and language differences.
       2. Non-IHS health care providers shall not bill IHS patients for charges determined to be non-allowable by the IHS FI or the patient’s Alternate Resource Payor.
       3. Medicare fee schedules will be automatically adjusted by the IHS FI, upon receipt of the regulatory changes from the Health Care Financing Administration.  IHS must be notified in writing of any changes in the Hospital’s or Provider’s Medicare participation status.
       4. The IHS is not an entitlement program; therefore, retroactive adjustments to Medicare reimbursement rates cannot be made.  To better compensate hospitals for actual costs, reimbursement will be based on information obtained from the most recently settled Medicare Cost Reports.  Medicare Cost Report information is obtained from the HCFA Public Use Files by the IHS FI.
       5. For claim submission procedures by hospitals and providers to the FI, see Subsection 30 of this section.
       6. The IHS has the right to request and receive medical summaries and or reports on any patient referred to a contract provider for evaluation or care.  Failure to receive the requested medical information may result in a delay of payment.
    2. Clauses Required for Hospital Contracts.

       CONDITIONS REGARDING THE REIMBURSEMENT OF DRUGS

       Under the terms of this contract, Federal funds cannot be used to reimburse hospitals for drug products which have been classified by the Food and Drug Administrations as being “possible effective” or as lacking substantial evidence of “effectiveness” (ineffective).  An exception is that Federal funds may be expended to reimburse a hospital when, in the opinion of the attending physician, no alternative means of therapy with drug products in the “possible effective” or “effective” Food and Drug Administration classification is available.

5-5.14  URBAN PROJECTS--CONTRACTS

1. General.  Urban Health services are provided for the benefit of urban American Indians and Alaska Natives by the IHS through grants, agreements and contracts with urban Indian organizations.

   The IHS Urban Health programs and related activities are authorized primarily by the Snyder Act.  Title V-- Health Services for Urban Indians of the Indian Health Care Improvement Act (IHCIA), Public Law 94-437, as amended, specifically targets programs for urban Indians.

   Title V includes both general and specific authorization for various contract and project grants that provide urban health care services and activities.

   The goals of the IHS urban health programs and related activities, as administered through the Urban Health Programs Branch, include:

   1. to elevate the health status of urban American Indians and Alaska Natives to the highest possible level; and
   2. to assist urban Indian organizations to establish and improve health services designed to meet the needs of the urban Indian community.

      Specific objectives include:

      1. providing assistance in the development of a comprehensive, effective health services delivery program with emphasis on health promotion and disease prevention; and
      2. providing assistance in the development of a comprehensive, effective network of local community resources for delivery of ambulatory health care services.  Such a network may be provided through direct and subcontract services, and through formal and informal agreements.

   Urban contracts are renewed annually provided that the contractor maintains an acceptable level of performance as determined by periodic IHS performance reviews.  More specifically, Section 505 of the IHCIA establishes requirements for renewing urban contract awards under Section 503.  The intent of these requirements is that Section 503 renewals will be awarded to incumbent contractors if they meet the provisions of Section 505, including the factors contained under Section 505(d).  As a result, Section 503 renewals of contracts which meet these requirements should be awarded to incumbent contractors on a non-competitive basis.  Section 506 states other contract and grant requirements.

2. Policy.  It is the policy of IHS to: (1) ensure that, within available resources, a comprehensive program of health services or access to health services is developed for each urban Indian community; (2) support community programs to prevent alcoholism and substance abuse; (3) assure that within those resources, eligible patients or clients, regardless of age or sex, have access to and are provided high quality health care service; and, (4) evaluate and monitor program performance of IHS-supported urban Indian programs.
3. Program Income for Urban Contracts.
   1. Background.  Title V of the IHCIA, as amended, Health Services for Urban Indians authorizes the IHS to enter into contracts with urban Indian organizations for the provision of health care and referral services for urban Indians residing in the urban centers in which such organizations are situated. P.L. 94.437 Section 506(c) allows the Secretary to revise or amend contracts, “notwithstanding any provision of the law to the contrary.”  This provision, however, is not intended as authorization for waiver of the Federal Acquisition Regulation (FAR); and Section 506(a) provides that: “Contracts with urban Indian organizations entered into pursuant to this title shall be in accordance with all Federal contracting laws and regulations.”
   2. Purpose.  The purpose of this subsection is to clarify the definition of “program income,” the ways in which it may be generated and accounted for, and its use and disposition.
   3. Definitions.
      1. “Urban Indian Organization” is a nonprofit corporate body situated in an urban center, governed by an urban Indian controlled board of directors.
      2. “Program Income” is gross income earned by the contractor from the federally supported activities.  It includes, but is not limited to, such income in the form of fees for services performed during the contract period, third-party patient reimbursement for hospital or other medical services such as insurance payments for patients where such reimbursement occurs because of contract supported activity, proceeds from the sale of tangible personal or real property, usage or rental fees, etc.  Further, interest earned as a result of program income shall be treated as program income.
   4. Utilization of Program Income.  Program income earned during the contract period shall be used to further eligible program objectives pursuant to the terms of the contract, regardless of the fiscal year in which the program income was collected.  Program income which is earned after the contract period is governed by the terms of the contract.  If the award does not address disposition of program income earned after the contract ends, that program income is to be retained by the contractor/Urban Indian Organization to further the objectives of the urban program.
   5. Reporting.  All contractors are required to report program income on a quarterly basis.  Records of the receipt and disposition of all program income must be maintained by the contractor in the same manner as required for the funds provided by the contract.
   6. Contract Clause.  All contracts awarded pursuant to Title V shall include the following clause:

      Program Income:

      Program Income is defined as gross income earned by the contractor from the federally supported activities (e.g. Third Party Income).  All program income earned during the contract period shall be retained by the awardee and shall be added to funds committed to the project by the Indian Health Service to further contract objectives.  Program income shall be utilized in a manner consistent with costs allowable under federal regulations.  Any other use of the funds is prohibited unless approved in writing by the Contracting Officer prior to the expenditure of the funds.

      Program income generated shall be reported to the awarding office on a quarterly basis.

4. References.  In future fiscal years, it is anticipated that funding for a proportion of IHS Urban Health Services Programs will be provided to recipients in the form of project grants.  A fuller discussion of these Urban Health grant programs will be provided under the forthcoming IHM, Part 5 - Management Services, Chapter 20 -- Grants and Agreements.

   In addition, further policy and procedural guidance concerning the IHS Urban Health Programs, is also provided under the IHM, Part 3-- Professional Services, Chapter 19- Urban Indian Health Program.

5-5.15  UNAUTHORIZED COMMITMENTS

1. Policy.  The IHS policy is that only properly authorized acquisition personnel, using correct acquisition procedures, may purchase supplies and services for IHS use.  When this policy is followed, "unauthorized commitments" will not occur.
2. Background.  Federal Acquisition Regulation Subpart 1.6 provides that only a warranted Contracting Officer holds the authority to enter into contracts or otherwise bind the government to a contractual commitment.  The HHS, Acquisition Regulation, Section 301.602-3(b)(1) states, "the Government is not bound by agreements with, or contractual commitments made to, prospective contractors by individuals who do not have delegated contracting authority."

   This Section explains what an "unauthorized commitment" is; how it can occur; and how to resolve the problem, should it arise. In order to address unauthorized procurement actions, unauthorized commitments are approved through a process referred to as ratification.

   The IHS is not bound by any formal or informal type of agreement or contractual commitment which is made by persons who do not have delegated contracting authority.  Payment for goods or services accepted in the absence of a legally binding contract may be made only through the ratification process.

3. Authorities.
   1. HHS Acquisition Regulation (HHSAR), Section 301.602-3, which governs ratification of unauthorized commitments.
   2. Federal Acquisition Regulation (FAR) Section 1.602-3 - Ratification of unauthorized commitments
   3. IHS Delegation of Authority, Administrative #1, "Acquisition Authorities"
4. Definitions.
   1. Head of the Contracting Activity (HCA) - Federal official who has overall responsibility for managing the contracting activity for IHS.  The IHS HCA is delegated broad authority regarding the conduct of acquisition functions.
   2. Contracting Officer (CO) - Federal employee warranted to enter into, administer, and/or terminate contracts and make related determinations and findings.
   3. Chief Contracting Officer (CCO) - The senior contracting officer responsible for reviewing requests for ratification and recommending whether an unauthorized commitment should be ratified before submitting to the HCA.
   4. Contracting Officer Representative (COR) - An individual delegated in writing by the CO with specific details, responsibilities, and limitations to perform specific technical or administrative functions for each service contract.  The COR delegation does not include the authority to enter into, administer, and/or terminate contracts and make related determinations and findings (D&F).
   5. Contract - As defined by the FAR, a contract is a mutually binding legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them.  It includes all types of commitments that obligate the Government to an expenditure of appropriated funds and that, except as otherwise authorized, are in writing.  In addition to bilateral instruments, contracts include (but are not limited to) awards and notices of awards; job orders or task letters issued under basic ordering agreements; letter contracts; orders, such as purchase orders, under which the contract becomes effective by written acceptance or performance; and bilateral contract modifications.  Contracts do not include grants and cooperative agreements covered by 31 U.S.C. § 6301, et seq.  Unless otherwise agreed upon by the parties or provided for in the Indian Self-Determination and Education Assistance Act (ISDEAA), 25 U.S.C. § 5301, et seq., agreements entered under the ISDEAA are not contracts for the purpose of applying this policy.
   6. iProcurement - An electronic software program within the Unified Financial Management System (UFMS) used to create, manage and track procurement requisitions.
   7. Modification - A written, mutually agreed upon change in the terms of the contract that is signed by the contractor and the contracting officer.
   8. Prior Year Funds - Funds appropriated in one FY and not spent in that FY, that may, in special circumstances, be available in the next fiscal year.
   9. Unauthorized Commitment - An agreement that is not binding solely because the Government representative who made it lacked the authority to enter into that agreement on behalf of the Government.
   10. Ratification - The act of approving an unauthorized commitment by an official who has the authority to do so.
5. Unauthorized Commitments. These include, but are not limited to:
   1. A request for supplies or services placed with a vendor by someone other than the person authorized to place and/or approve a request.
   2. A request for supplies or services placed with a vendor without a valid purchase order or other approved acquisition mechanism.
   3. A request for supplies or services placed with a vendor and made in excess of the dollar limitations of the acquisition mechanism, or the CO's warrant.
   4. New tasks added to the Statement of Work without an authorized modification to the contract.
   5. Requests for services placed with a vendor and that were performed outside the period of performance of the acquisition mechanism; or supplies ordered/received outside the period of performance of the acquisition mechanism.
   6. Changes to the Statement of Work or other directions given to a vendor by someone other than a contracting officer that alter the terms and conditions of an existing contract or other approved acquisition mechanism.
6. Responsibilities.
   1. Supervisor - When an unauthorized commitment has occurred, the immediate supervisor of the employee or COR who made the unauthorized commitment must submit to their CCO, a memorandum that contains a complete statement of facts describing the circumstances that led to the unauthorized action and must include as attachments all relevant documents and records.  The memorandum shall address and include the following:
      1. The IHS-975 Exit Disclaimer: You Are Leaving www.ihs.gov  Request for Ratification of Unauthorized Commitment form, which is PDF form-fillable (Manual Exhibit 5-5-21). This form has been added to the Unauthorized Commitments/Ratification Requests SharePoint Site which is accessible through the Division of Acquisition Policy (DAP) website once user access permission is granted by the Unauthorized Commitment Subject Matter Expert (UC SME);
      2. The IHS-975 Exit Disclaimer: You Are Leaving www.ihs.gov  Request for Ratification of Unauthorized Commitment form must be filled out as completely and accurately as possible;
      3. The supervisor should consult with their funds certifying official to confirm their bona fide needs analysis of time, purpose, and amount of the funds identified as chargeable for the expense;
         1. No new requisition is required if the contract vehicle has not been closed; the unauthorized request was made during the period of performance; the request was within scope and a bona fide need during that period of performance; and funds remain to pay the invoice.
         2. A requisition is required if the contract vehicle has been closed; the request was made during the period of performance; the unauthorized request was within scope and a bona fide need during that period of performance; and funds do not remain on the contract vehicle to pay the invoice.  The new requisition must use funds available in the fiscal year the obligation was originally made.
         3. If the unauthorized action took place in a year other than the current FY, approval for the use of prior year funds is required and a Request Use of Prior Fiscal Year Funds must be completed, signed by the Funds Certifier and the Allotment Holder (the Chief Financial Officer's signature line remains blank at this time).  If the unauthorized action took place during the current FY, current FY funds must be used.  Consult with your funds certifying official to determine the availability of these funds and conducting bona fide needs analysis for any potential obligations.
         4. A requisition is required if there was an unauthorized request that was a bona fide need at the time of request, but there was no contract in place.  The requisition must use funds available in the FY the unauthorized request was made.  If the unauthorized action took place in the current fiscal year, then a requisition citing current year funds must be submitted.  If the unauthorized action took place in a year other than the current FY, approval for the use of prior year funds is required and a Request Use of Prior Fiscal Year Funds must be completed, signed by the Funds Certifier and the Allotment Holder (the Chief Financial Officer's signature line remains blank at this time).
         5. Include vendor invoice.
      4. A statement of corrective measures for the Office or Division that the unauthorized request originated or action plan taken by the supervisor to prevent future violations (e.g. ethics training, purchase card or administrative procedures training, or other appropriate action to include corrective action, if appropriate);
      5. The Supervisor must report to both the CCO and ratifying official in writing, when the corrective action has been fully implemented and completed.  The CCO is responsible in verifying that the corrective actions are in place to preclude this action from occurring again; and
      6. IHS employees responsible for unauthorized commitments are subject to disciplinary action in accordance with Department of Health and Human Services and/or IHS policy and relevant sections of collective bargaining agreements as applicable.

         An employee responsible for making an unauthorized commitment may be subject to one or more of the following corrective actions:

         1. Counseling,
         2. Personal responsibility for paying the costs of the commitment,
         3. Education and training, and
         4. Suspension or rescission of his/her COR appointment.

      Supervisors should work with their servicing Human Resources office to determine appropriate disciplinary and/or corrective actions in accordance with HHS Instruction 752.

   2. Chief Contracting Officer (CCO)

      The IHS-975 Request for Ratification of Unauthorized Commitment form has been added to the SharePoint Site for use in answering the required information below.  The form is a required document for all IHS requests for ratification of unauthorized commitment submitted after this policy is signed.

      The CCO or assigned DAP CO, when unauthorized commitments occur at the HQ level shall provide a separate written statement to the HCA that supports their Area Office and it shall include the following:

      1. Supplies or services have been provided to and accepted by the Government, or the Government otherwise has obtained or will obtain a benefit resulting from performance of the unauthorized commitment;
      2. Notification that the ratifying official has the authority to enter into a contractual commitments;
      3. State that the resulting contract would otherwise have been proper if made by an appropriate contracting officer;
      4. State that the unauthorized commitment was reviewed and found to be a fair and reasonable price;
      5. State the CO and/or CCO recommends payment;
      6. State funds are available (as described in section (iii) and (iv) of the Supervisors responsibility) and were available at the time the unauthorized commitment was made;
      7. Certify that the ratification is in accordance with any other limitations prescribed under agency procedures; and
      8. Once analysis and written statement have been completed, the CCO or assigned DAP CO, when unauthorized commitments occur at the HQ level will submit all documents electronically to the DAP as one package via the Unauthorized Commitments/Ratification Requests SharePoint site.

      For all requests for ratifications at the IHS Headquarters level, the assigned DAP CO will be responsible for providing a separate written statement to the HCA.

   3. Division of Acquisition Policy
      1. Once the Ratification Request Package has been received by DAP through the Unauthorized Commitments/Ratification Requests SharePoint site, the DAP Unauthorized Commitment Subject Matter Expert (UC SME) will confirm initial receipt by entering the information into a ratification spreadsheet.  The UC SME will then review all documents submitted.  If revision or additional information is required, the file will be returned to the CCO for correction and resubmission.
      2. Pursuant to HHS Acquisition Alert 2017-02, all requests for ratifications below the simplified acquisition threshold (SAT), currently $150,000, are to be reviewed and a final ratification decision will made by the HCA.
      3. Pursuant to HHS Acquisition Alert 2017-02, the Office of General Counsel (OGC), General Law Division (GLD), shall review unauthorized commitments in an amount at or exceeding the SAT, which is currently $150,000.
      4. Under $150,000 ratification is approved by the HCA, and the responsible CO will execute the recommended contract action.  If a credit card is determined to be the method of payment, the CCO will designate to an appropriate purchase cardholder.  The UC SME will scan and e-mail a copy of all ratification documents to the appropriate CCO.
      5. If prior year funds are being used and the ratification is approved, regardless of Office, DAP will return an electronic copy of the ratification package with the HCA signature to the Office of Finance and Accounting (OFA).  The OFA will review the request to use of prior FY funds for signature by the Chief Financial Officer (CFO).  Once it is approved by the CFO, OFA will scan the package and e-mail to the appropriate Area Executive Officer and to DAP.  The Area Executive Officer will then facilitate having the signed request attached to a requisition in iProcurement.  The DAP will scan and e-mail the signed ratification package to the CCO for assignment to a Contract Specialist and inclusion in the contract file.
      6. If the request for ratification is disapproved, the request with supporting documentation and a copy of the decision is returned to the CCO.
      7. Cases that are not ratifiable under FAR 1.602-3(c) may be subject to resolution as recommended by the Government Accountability Office (GAO) under its claim procedures (see GAO Policy and Procedures Manual for Guidance of Federal Agencies, Title 4, Chapter 2) or as authorized by FAR subpart 50.1.
      8. If the action cannot be ratified, the CO assigned to the case file must notify the vendor/contractor and the Program Office in writing stating why the action is not ratifiable.
      9. The CO processing the ratified procurement will upload to the Unauthorized Commitments/Ratification Requests SharePoint site a copy of the executed contract document to include the ratification documents posted to the Unauthorized Commitment/Ratification SharePoint site and mark 'Complete'.
      10. The UC SME shall email a copy of the signed ratification to the HCA and the SPE as required by HHSAR 301.602-3(c).
      11. All documents pertaining to the ratification will be filed with the executed procurement documents in the contract file.  The contract file will be retained in accordance with the contract retention requirements provided by FAR 4.805.
7. Non-Ratifiable Commitments.

   As specified under FAR 1.602-3(d), cases that are not ratifiable may be subject to resolution as recommended by the GAO under its claim procedures (GAO Policy and Procedures Manual for Guidance of Federal Agencies, Title 4, Chapter 2).

   If the unauthorized commitment cannot be ratified, the vendor will not be paid by the Government and the individual employee who made the unauthorized commitment may be held personally liable for the payment of the supplies or services.  Actions by an employee that result in an unauthorized commitment may also be subject to corrective action.

   5-5.16  CONTRACT PROTESTS, DISPUTES, AND APPEALS

   1. General.  This Section prescribes IHS policy and procedures for filing contract protests and for processing contract disputes and appeals.

      In general, IHS policies and procedures regarding contract protests, disputes, and appeals are governed by the FAR, Part 33--Protests, Disputes, and Appeals; by the HHSAR, Part 333; and by the PHSAR, Part 333.  In addition, the IHS also has certain special requirements for the review of all proposed dispute and appeal decisions.

      Protests may occur before or after a contract award.  Regardless of when a protest occurs, IHS policy is to attempt to resolve the contractual issues by negotiation and mutual agreement without resort to litigation.

      Contract protests are governed by the terms of the FAR 33.1, the HHSAR 333.1, and the PHSAR 333.1.

      Subsections C, D, and E describe the procedures for processing protests that are filed with the Agency, the General Accounting Office (GAO), or the General Services Board of Contract Appeals (GSBCA).

   2. Contract Protests--Overview.  The term “protest”, as used in this Section, is defined under FAR 33.101 to mean “a written objection by an interested party to a solicitation by an agency for offers for a proposed contract for the acquisition of supplies or services or a written objection by an interested party to a proposed award or the award of such a contract.”

      For the purpose of filing a protest, the term “interested parties” means an actual or prospective offeror whose direct economic interest would be affected by the award of a contract or by the failure to award a contract.

   3. Protests to the Agency.  IHS COs shall notify the Headquarters IHS Protest Control Officer (PCO) by telephone immediately upon receipt of a written or oral intention to protest.  A copy of the written protest shall be sent immediately upon receipt by the CO to the PCO, unless the CO is instructed otherwise.

      If a protest has been filed with the CO before an award, the CO may not make an award unless he/she decides that it is necessary to do so in spite of the protest.  The FAR, HHSAR, and PHSAR provide criteria used to determine if an award is necessary.  The CO shall prepare a formal determination and obtain the approval of the IHS, PCO, and the Office of General Counsel before awarding the contract.  If the protest has been filed with the Secretary, is addressed to the Secretary, or requests referral to the Secretary, the CO shall also obtain approval of the Department Protest Control Officer (DPCO) prior to proceeding with the award.  A sample format for preparing the determination is in Exhibit 5-5.16-A.

      In all instances, the CO shall prepare a protest file and send four copies of the file to the IHS PCO.  The files should be indexed and marked “IMMEDIATE ACTION-PROTEST BEFORE AWARD” or, for protests received after an award, “IMMEDIATE ACTION-PROTEST AFTER AWARD.”  The requirements for the contents of a protest file are contained in FAR 33.104 (a)(3)(ii), HHSAR 333.103, and the protest file index contained in Exhibit 5-5.16-B.

   4. Protests to the GAO.  The CO shall give priority attention to each protest filed with the GAO.  For each such protest, a protest file shall be prepared and sent to the IHS PCO within 10 working days from receipt of the protest.  The CO’s statement of facts and circumstances shall be submitted to the IHS PCO within 15 working days from receipt of the protest.

      When there is a protest, but the CO believes that an award should be made, the CO shall prepare a final decision and send it to the IHS PCO for approval to award the contract.  This approval must be obtained from the Deputy Assistant Secretary for Grants and Acquisition Management, OS.

      When the protest is received after the contract has been awarded, the CO, in coordination with the PO, must decide whether to stop work or continue the contract.  If the CO decides the contract should continue, he/she shall prepare a formal determination within 10 working days and send it to the IHS PCO for review and final approval by the Deputy Assistant Secretary for Grants and Acquisition Management, OS.  Additional requirements for protests to the GAO are contained in HHSAR 333.104 and PHSAR 333.104.

   5. Protests to the GSA Board of Contract Appeals (GSBCA).  When notification is received from the GSBCA of the filing of a protest, the CO shall immediately notify the Department PCO, the OGC, and the IHS PCO.  If the solicitation is open, the CO shall send a written notice of the protest within one working day after receipt of the protest to all parties from whom a proposal or bid was solicited.  If the solicitation has closed, a notice is sent to those who submitted a bid or offer.

      Within ten work days of the filing of the protest, the following distribution of the protest files must be complete (i.e., materials are received by the appropriate officials):

      1. 1 copy to the IHS PCO;
      2. 2 copies to the Office of General Council (OGC)/Business and Administrative Law (BAL) Division, Parklawn Building; and
      3. 1 copy to the DPCO.

      Protests files should be indexed and assembled in an orderly manner.

      When there is a protest, but the CO believes that an award should be made, the CO shall prepare a final decision and send it to the IHS PCO for approval to award the contract.  The approval must be obtained from the Deputy Assistant Secretary for Grants and Acquisition Management.

   6. Resolution of Disputes.  Disputes over contract terms and performance can occur any time during the period of performance of a Government contract.

      IHS policy is consistent with FAR 33.204 to try to resolve contractual issues by mutual agreement without litigation. When this is not possible, two avenues for resolution of disputes are available: administrative and judicial.

      Most disputes under Government contracts are processed and settled under the administrative procedures.  Administrative resolution of contract claims and disputes is under authority of the Contract Disputes Act of 1978.  FAR 33.2 and HHSAR 333.2 concern the implementation of this Act.  The “disputes clause” (FAR 52.233-1) included in all Government contracts provides for the judicial remedies available to the contractor include filing a claim with the U.S. Court of Federal Claims.

      The disputes clause requires that all contractor claims be submitted in writing to the CO.  The CO is to prepare a written decision on the claim and send it to the contractor.  A format for a final decision is in FAR 33.211.  The notice of a final decision should be sent by registered mail, or certified mail, or delivered in person (if so, a receipt should be obtained) and should contain:

      1. A description of the claim or dispute;
      2. Reference to the pertinent contract terms;
      3. A statement of the areas of agreement and disagreement;
      4. A statement of the CO's decision with supporting rationale; and
      5. A statement of the contractor's right of appeal.

      On claims of $50,000 or less, the CO must render a final decision within 60 days after receipt of the claim.  On claims over $50,000, the CO must issue a final decision within 60 days or notify the contractor of the time within which a decision will be issued.  The time frame must be reasonable and be based on the circumstances that pertain.

      The CO’s decision must be submitted to the Office of General Counsel (OGC), Office of the Secretary (OS), or the Regional Attorney in the respective HHS Regional Office, for legal advice, format review and approval prior to sending the final decision to the contractor.  A format for a final decision is in FAR 33.211.  Concurrent with that submission, a copy must also be sent to the Director, DCGP, OAM, IHS, for review and approval.  After approvals have been received, the CO sends the final decision in writing to the contractor by registered or certified mail.

      Upon receipt of the CO’s decision the contractor has 90 days to appeal, in writing, to the Armed Services Board of Contract Appeals (ASBCA), or one year to file suit in the U.S. Court of Federal Claims if the contractor does not agree with the decision.  If the contractor does not take action within this 90 day or one year period, respectively, the CO’s decision on the claim is final and conclusive and is not subject to review by any other forum, tribunal, or agency of the Government.

      For appeals to the ASBCA, as required by HHSAR 333.212, the CO must assemble a file (referred to as the “Rule 4” file) within 30 days of receipt of an appeal or notice that an appeal has been filed.  Suggested format for transmitting the file to the ASBCA is shown in HHSAR 332.212-70.  The CO must forward the file to the Government Trial Attorney for review and approval.

      Documents to be included in the file are specified in HHSAR 333.212.

      After the Government Trial Attorney has approved the file, the CO shall prepare four copies (or more if so requested) of the file and distribute one copy to each of the following:

      1. ASBCA;
      2. Appellant;
      3. Government Trial Attorney;
      4. IHS Protest Control Officer.

      ASBCA will hear the case and render a decision.  If the contractor accepts the decision, the dispute is resolved.  If the contractor or the Government chooses to appeal the decision of the ASBCA or the U.S. Court of Federal Claims, the parties must perfect their appeals to the U.S. Court of Appeals for the Federal Circuit within 120 days from the date of the decision.

      If the contractor elects to resolve the decision through the U.S. Court of Federal Claims, in lieu of ASBCA, HHS will be represented by the U.S. Department of Justice.  In this case, the CO will coordinate all actions through the HHS, Office of General Counsel.

      The Contract Disputes Act provides for other rights and responsibilities that may be applicable, including an accelerated procedure.

5-5.17  POST-AWARD GUIDANCE

1. Overview.  After an IHS acquisition contract is awarded, two essential “follow through” processes remain to be performed by IHS contract personnel before the contract may be considered fully completed and all IHS contract management responsibilities may be considered fully met.
   1. “Contract Administration” is the first of these processes and involves monitoring contractor performance, maintaining contract award files (discussed in detail under Section 6), resolving contract problems, and making sure that the contract is fully executed according to its terms.  Proper administration of procurement contracts is critical to the IHS fulfilling its mission to provide quality and timely health care services in a cost-effective manner to the American Indian and Alaska Native population it serves.
   2. “Contract Closeout” is the second process and involves the formal completion of all final contract activities and obligations.  This includes determination and documentation in the file that the contract has been completed and that the necessary certifications and disposition of funds has taken place.
   3. IHS policy, in the period after award of every acquisition contract, is always to strive:
      1. For quality in contract administration;
      2. For quality in the efficiency of contract closeout.
2. Contract Administration.  Contract administration is the process that ensures that the contract is performed according to its terms.  There are three goals in this process -- quality and conditions, timeliness, and cost containment.

   Federal regulations addressing contract administration are found in the FAR Parts 32, 33, 42, 43, 45, 46, and 49, and in the HHSAR Parts 332, 333, 342, and 345.

   1. General.  The CO must be certain that products and services delivered to the IHS meet the requirements in the contract.  If a product or service is not delivered at the time it is needed, it may be of reduced value or even worthless.  If the contractor does not meet contract delivery schedules, it may jeopardize the ability of IHS to complete a project, or to fulfill an obligation on time.

      With cost reimbursement contracts, the IHS has the additional responsibility to see that contract funds are monitored to ensure that the Government reimburses only those costs that are reasonable, allowable, and allocable.

      Contract administration can be relatively simple or very complex depending on the type of contract, contractor performance, or the nature of the work.  For example, fixed-price contracts (with the exception of construction contracts) often require limited contract administration.  Cost reimbursement contracts, on the other hand, require close technical surveillance and monitoring of costs.  No matter what type of contract is involved, a breakdown in contract administration can undo all the careful effort involved in the negotiation, selection, and award of a contract.

      The contract administration process includes:

      1. Monitoring the contractor’s technical progress and performance;
      2. Reviewing and approving invoices for payment;
      3. Controlling the use of Government property;
      4. Approving the use of subcontracts;
      5. Processing contract modifications;
      6. Processing terminations; and
      7. Resolving disputes.

      The CO is responsible for contract compliance.  However, the CO depends on program, technical, and financial personnel for support.  The PO, formally appointed by the CO, plays a major role in this process by monitoring work progress, identifying delays, determining needed changes, and providing advice and assistance to the CO.

      The key to effective procurement contract administration is to constantly monitor contractor performance.  Such monitoring helps to avoid potential problems, and to identify and resolve existing problems.  Monitoring contractor performance is accomplished by reviewing progress and financial reports, and by making on-site reviews as necessary.

   2. Site Visits.  The purpose of a site visit to a contractor’s location is to review contract performance and discuss with the contractor’s representative any problems that might have developed.  Site visits may not be necessary for all contracts.  On the other hand, when a contract is large and complex, the visits may be essential.  The need and frequency of site visits should be jointly determined by the CO and the PO.  The visits should be made by the PO and/or the CO or Contract Specialist assigned to the contract.

      Site visits should be conducted in such a manner as to minimize any adverse impact or interference with the contractor’s ability to perform.

      The site visit may include:

      1. A check of actual performance compared to scheduled and reported performance;
      2. A review of the facilities and working conditions; and
      3. Verification that labor and other costs charged on a cost reimbursement contract are necessary to the performance of work under the contract.

      When the site visit is completed, a report should be included in the contract file.  A sample format is in Exhibit 5-5.17-C.

   3. Inspection and Acceptance.  The PO is required to promptly inspect the contractor’s supplies and/or services to see if they are acceptable.  Failure of the Government to promptly inspect and accept supplies and services may result in the contractor being entitled to the payment of interest pursuant to the provisions of the Prompt Payment Act.  This Act currently allows seven days after receipt of supplies or services for acceptance to occur without any accrual of interest.

      For Fixed-price contracts, acceptance or rejection by the Government must occur within seven days of receipt.  A report which discusses whether or not the delivered supplies or services meet the requirements stated in the contract must be sent to the CO by the PO.  The reasons for any proposed rejections shall be clearly stated.  If the furnished supplies or services are acceptable, the PO may indicate his/her acceptance by signing the invoice or voucher.  For payments made by a fiscal intermediary, see the discussion under Subsection 31-- Fiscal intermediary in Section 13--Contract Health Services of this Chapter.  If any of the furnished supplies or services are unacceptable, a report which discusses the reasons for any proposed rejection must be sent to the CO.  The definitions of Inspection and Acceptance are in FAR 46.101.

   4. “Changes” Clause.  The contract clause entitled “Changes” allows the Government to alter certain aspects of the work to be performed without the consent of the contractor within the general scope of the contract.  The Government must provide for an equitable adjustment in contract costs and in the delivery and performance period, based on the nature of the change if it involves additional costs and may be required to provide additional time for delivery or performance.  The FAR 43.205 prescribes the use of alternative “changes” clauses that are to be included in the contract as appropriate.

      The standard “changes” clause for both Fixed-price and Cost-reimbursement contracts provides that the Government has a unilateral right to make changes within the general scope of the contract in any of the following:

      1. Drawings, designs, or specifications (in supplies) where the supplies are to be specifically manufactured for the Government;
      2. Method of shipment or packing; and
      3. Place of delivery, acceptance, or place of performance.

      A contract change can be accomplished by a “supplemental agreement” between the contractor and the Government.  Such a supplemental agreement is the preferred method for making a contract change.  The supplemental agreement allows for the adjustment of price and/or cost by mutual agreement between the contractor and the Government.  A supplemental agreement is also to include a contractor’s statement of release which precludes future claims for equitable relief by the contractor.

      When time or other factors do not permit a supplemental agreement to be reached and issued, a “unilateral change order” may be issued by the Government.

      When a change order is issued, the contractor must complete the work as ordered (FAR 43.201(b)).  If the change requires the contractor to incur additional costs or takes additional time for performance or delivery, the contractor may submit a claim for an equitable adjustment.  The claim must be submitted by the contractor within 30 days, and before receipt of final payment under the contract.  If the cost of the work is decreased as a result of the change order, the Government has the right to a price adjustment.

      As indicated in FAR 43.2, a "change order" may only be:

      1. Issued by the CO;
      2. Within the general scope of the contract; and
      3. Written using Standard Form 30, Amendment of Solicitation/Modification of Contract.  (In emergency situations, the PO may request the CO to issue an oral change order, which subsequently shall be confirmed in writing.)

      Change orders should be negotiated or definitized as quickly as possible in order to avoid problems in determining the cost of the work required by the change.

      The CO should make sure that each change order is complete and should discuss each such order with the PO before issuance.

   5. Government Property.  Under FAR 45.102, contractors generally are required to furnish the property necessary to perform Government contracts.  Sometimes it is in the Government’s best interest to provide property, material, or supplies for the contractor’s use.  This is especially true when the Government property, provided to the contractor will save the Government money.

      If a contractor asks for IHS property under a contract and the IHS agrees, HHSAR 345.3 requires the CO to make a written determination to authorize the property.  A sample format for determination is included as Exhibit 5-5.17-B.  This determination must show:

      1. That no practical or economical alternate exists;
      2. That the Government will receive adequate compensation for the property, or
      3. That furnishing Government property will result in lower costs.

      The PO and the Area Property Management Officer should also review and agree with this request, and make a recommendation regarding this request to the approving official. In the IHS, the clearance authority to approve of the disposition of Government furnished property is delegated as follows:

      1. Less than $1,000 per item -- CO or $5,000 total.
      2. $1,000 or more -- Agency Property Officer per item or $25,000 total.

      However, only the CO can specifically authorize the contractor to use or acquire Government property used under a contract.

      The contractor is responsible for the proper maintenance and control of IHS property provided under a contract in accordance with the requirements specified in the DHHS publication, “Contractor’s Guide for Control of Government Property.“  The responsible Property Management Officer must also review the contractor’s property control system and monitor compliance with any limitations or conditions for its use.

      When a contract ends, the IHS property must be disposed of following IHS property management procedures.  When a continuing requirement exists, the property may be transferred to a succeeding contract as determined by the CO.

   6. Payments.  The Government has an obligation to pay the contractor for supplies or services delivered or performed.  Under a fixed-price contract, the exact amount to be paid has been stated in the contract.  Under cost-reimbursement contracts, the Government is only obligated to pay the contractor for reasonable, allowable, and allocable costs incurred in performing the work.

      On Cost-plus-fixed-fee contracts, the Government pays for the costs incurred plus an agreed upon additional fixed-fee amount, stated in the contract.

      Under a Fixed-price contract, payments may be made in the following ways if stated in the contract:

      1. A single payment upon completion and acceptance of all work under the contract;
      2. Partial payments upon partial delivery and acceptance;
      3. Progress payments;
      4. Advance payments under exceptional circumstances.

      Under a Cost-reimbursement contract, usually, the contractor submits a monthly invoice or voucher with documentation supporting the costs claimed.  The invoice/voucher should be reviewed and, if acceptable for payment, be signed by both the PO and CO. It is then sent to the paying office.

      If any amount on the invoice/voucher is to be suspended or disapproved, it must be so noted, along with the reasons for the suspension or disapproval.  Under HHSAR 342.7003, payment cannot be made when a report is overdue or when the contractor fails to perform or deliver work/services required by the contract.

      Contractor invoices/vouchers to the IHS must be processed promptly.  Under the Prompt Payment Act, payments under the fixed-price contracts must be made in 30 days of receiving a proper invoice or 30 days after accepting supplies or services, whichever is later.  If a contractor submits an invoice directly to the CO, HHSAR 332.905 requires that the CO process a proper invoice within 16 days.

      In contracts with advance payment provisions, monies are advanced, as provided in the contract, through transfers of funds based on contractor submissions for drawdowns to the Fiscal Office handling advance payments.

   7. Termination.  Two methods of termination are covered by standard contract clauses: (1) termination for convenience of the Government and, (2) termination for default.  The FAR Part 49--Termination of Contracts, describes in detail the policies and procedures that govern complete or partial termination of contracts for the convenience of the Government or for default.
      1. Under a termination for convenience, the Government has a right to cancel a contract when it is determined by the CO to be in the Government’s best interest.  Cancellation of a contract may prove to be expensive.  Usually, these terminations occur because of changes in Government requirements or because of funding limitations.  Before issuing a termination notice, the CO shall notify the Awarding Activities Office, SCO, and the PORA.

         A written notice of termination must be sent to the contractor.  It must clearly state that the contract is being terminated.  Suggested formats are shown in FAR Subpart 49.102.

         Where possible, the CO is encouraged to negotiate a settlement that is mutually agreed upon at the time of contract termination, and to incorporate this final settlement into the contract modification.  Settlement claims submitted by the contractor must be promptly reviewed by the CO who negotiates a settlement.  All settlement proposals over $100,000 must be submitted for appropriate audit agency review and recommendations.  After completing a settlement negotiation, a memorandum detailing how the agreement was reached must be written and included in the contract file.

      2. Under a termination for default, the Government terminates the contract because of the contractor’s actual or anticipated failure to perform its contractual obligations.  If termination for default is considered, the CO must formally notify the contractor in writing of the failure to perform.  The contractor has 10 days to correct the failure.

         In the event an agreement cannot be reached, the CO is to follow the procedures outlined under FAR 49.109-7.  This notice is called a Cure Notice.  It must detail the provisions of the contract that the contractor has failed to meet.

         Sample notices are shown in FAR 49.607.  If the contractor fails to cure the situation or to provide a satisfactory explanation for its delay, a termination notice may be issued.

         The content for the termination notice is in FAR 49.402-3(g).

         If a fixed-price contract is terminated for default, the contract provides that the Government may procure similar supplies or services from another contractor.  The original contractor may be liable for any excess cost for acquiring replacement items or services.  Additionally, the contractor may be liable for any liquidated or actual damages or for liquidated damages, if provided for in the contract.

3. Contract Closeout.  There are two tests that a CO must apply before proceeding to close out a contract: (1) if the contract is physically complete, and (2) if the contract is administratively complete.

   A contract is physically complete when all required items are delivered and/or services have been performed and accepted.  A contract is administratively complete when all audits, releases, and payments are finalized and the required documentation is in the file.

   Contract closeouts are addressed in the following regulations:  FAR Subpart 4.804 and HHSAR Subpart 304.804.

   1. General.  There can be a tendency to lose interest in a contract after the goods or services have been accepted.  It is important that the administrative actions required to complete and close a contract be performed as soon as possible.  Delays may result in funds being tied up that are owed to the contractor or the Government.  In addition, unresolved matters become more difficult to reconcile as time passes.

      The CO has the primary responsibility for contract closeout.  The PO must certify that goods were delivered and accepted or that services were completed satisfactorily.  This is usually done by a memorandum from the PO to the CO.  The memorandum becomes a part of the contract file.  If Government property was used under the contract, the Property Management Officer must provide information regarding the disposition of the property.  The contractor must submit a final invoice and other required information before the contract can be closed.  There are also other actions that must be completed before closeout.  These additional actions are outlined in FAR 4.804-5.

   2. Fixed-Price Contract.  Under FAR 4.804-1(a)(2), Fixed-price contracts should be closed within six months of the month the CO receives evidence of completion.  This may be done with an acceptance report for service or supply contracts, or a memorandum from the PO for a service-type contract.  A contract closing memorandum and checklist shall be included in the file.  A sample format is included as Exhibit 5-5.17-C.
   3. Cost-Reimbursement Contracts.  As specified in HHSAR 304.804-1(3), Cost-reimbursement contracts should be closed within 20 months from the month the CO receives evidence of physical completion.  This evidence should be a memorandum from the PO attesting to satisfactory performance and completion of the contract requirement.

      Cost-reimbursement contracts may have requirements to address that are not applicable in Fixed-price type contracts.  This includes overhead rates, patents, and royalties.  The CO is responsible for ensuring that these matters are addressed in the close-out memorandum.

   4. Audit Responsibilities.  HHSAR 304.870 has audit procedures to be followed for cost-reimbursement contracts.  The procedures include both desk and field audits. Desk audits are performed by the CO or a Cost Analyst.  The audit is based on the information contained in the contractor’s vouchers and payment records, and on occasion, discussions with the cognizant Government auditor, when appropriate.

      Field audits are performed by auditors who do on-site review of the contractor’s financial system and/or specific contracts.  The following is a summary of the requirements for desk and field audits for cost-reimbursement contracts.

      DESK AUDITS

      Contracts with colleges and universities, hospitals, and State and local governments.  Also, contracts under $500,000 with other institutions and organizations.

      FIELD AUDITS

      Contracts over $500,000 with commercial organizations and non-profit organizations other than colleges and universities, hospitals, and State and local units of government for which an agency other than HHS has audit authority.

      Note that IHS contracts with state, local, and other governmental units, and with Indian tribes, are currently covered by single audit requirements, in P.L. 98-502, the "Single Audit Act," as amended.

5-5.18  LEASING.

1. Overview.  This Section references IHS policy and procedures for the leasing of real property, including the lease of building space and of personal property, such as equipment and motor vehicles. Specific leasing regulations are contained in the FAR Part 7.4 for equipment, in the FAR 8.11 for motor vehicles, and in the “Federal Property Management Regulations” (FPMR), 41 CFR Part 101-16 for building space and other real property. Each of these Federal regulations is Government-wide in scope, governing the leasing activities of all Federal agencies, not just the IHS.

   Within the IHS, the IHM, Part 5, Chapter 11 -- Real Property discusses IHS real property management policies and should be referred to in planning and executing a real property lease activity.  This IHM chapter also discusses the special conditions that apply to IHS real property leases with Indian tribes.

   Similarly, IHM, Part 5, Chapter 12 -- Personal Property describes IHS personal property management policies, including leasing.

2. PHS Lease Contracting Officer Warrant Program.  Effective July 28, 1992, PHS implemented a warrant program for lease contracting officers to assure that real property leases are executed by officials who have appropriate experience and training.  Under this program, appointments (as described in 48 CFR 1.603-3) will be used to provide lease contracting officers with signature authority to acquire real estate by lease pursuant to the authorities contained in 41 CFR 101-18, specific delegations of authority from the Administrator of the GSA, and/or as provided by statute.  The OES, PHS, in Regions II, VI, and X have warrant authority to negotiate and sign all lease agreements on behalf of the IHS.

   The memorandum which contains the requirements and implements the PHS lease contracting officer warrant program which was signed by the Director, Office of Management, Public Health Service, on July 28, 1992, is provided in Exhibit 5.5-18-A.

3. Acquisition Real Property by Lease.  The Director, Division of Facilities Management, OEHE/HQE, has delegated signatory authority for all form SF-81, Requests for Space.
   1. Requests for leasing GSA-assigned building space must be approved as specified in FPMR 101-17.101.  These requirements are processed through the cognizant IHS Area Reality Officer and at IHS Headquarters.
   2. The IHM, Part 5, Chapter 11 -- Real Property, Section 5-11.4, Acquisition by Rationale, describes IHS procedures and approvals required for the lease of real property, including special purpose space.
   3. IHS real property leases with Indian tribes are governed by the specific policy requirements under the IHM, Part 5, Chapter 11 -- Real Property, Section 5-11.4, Direct Lease of Real Property.

   Except for GSA-assigned space, all requirements for leased space must be approved by the IHS Lease Priority Committee through an application to the Lease Priority System (LPS).  Instructions and forms for LPS applications are provided in the “Facilities Engineering Technical Handbook,” Volume 4, Chapter 7 -- IHS Lease Priority System.

   The appropriate leasing forms are available through the IHS Area or Headquarters Real Property Management Office.  Descriptions of these forms are provided under 48 CFR 570.8, Forms Used for Contracting for Leasehold Interests in Real Property.

4. Personal Property.
   1. Equipment.  The decision to either lease or purchase equipment should be based on a case-by-case evaluation of the comparative cost and other factors relevant to the specific requirement.  These factors are set forth in FAR 7.40(a).  Assistance and advice in making a lease versus a buy decision may be obtained from the cognizant IHS Property Management Officer at the Area Office or at IHS Headquarters.
   2. Motor Vehicles.  Leasing of motor vehicles must be coordinated with the cognizant IHS Property Management Officer at the Area Office or at IHS Headquarters.

5-5.19  SELF-DETERMINATION CONTRACTS.

1. Overview.  In 1975, the Indian Self-Determination and Education Assistance Act was signed into law as Public Law 93-638 by President Gerald Ford.  The central purpose of this legislation was to provide Federally-recognized American Indian tribes and Alaska Native groups with the right to contract directly with Federal agencies to receive funds to provide various services that heretofore had been provided by these agencies.

   As Public Law 93-638 has been amended by the Congress over the past twenty years, the obligation and involvement of the IHS in self-determination contracting has continued to expand.

   Within the IHS, the Office of Tribal Activities (OTA) is primarily responsible for the coordination of the Agency’s self-determination contracting policies and procedures.

2. Policy.  Public Law 93-638 self-determination contracting is considered non-procurement contracting.  As such, self-determination contracting involves a direct “government to government” relationship between the Federal Government and the various American Indian and Alaska Native governments.  For administrative purposes within the IHS, however, the self-determination contracting process has been institutionalized around the acquisition function.

   Pending issuance of joint, final self-determination regulations by the IHS and the Bureau of Indian Affairs (BIA), IHS “683 contracting” policy is governed by the Public Law 93-638 statute, as amended; relevant legislative history; existing Federal regulations, and IHS directives.

   At present, IHS self-determination policy and advisory directives are compiled in an Interim Guidebook published by the OTA.  The purpose of the Interim Guidebook is to centralize in one reference source all current operating instructions regarding the self-determination contracting process.  Applicable policies include Indian Self-Determination Memoranda (ISDMs) issued by the OTA and Contract Policy Letters (CPLs) developed by the OAM, Division of Contracts and Grants Policy (DCGP).  The Interim Guidebook also includes Indian Self-Determination Advisories (ISDAs) which focus on more specific 638 contracting issues or problems and which are issued by the OTA, as the need arises.

   The IHS will continue to operate within the framework of the Interim Guidebook until the joint IHS/BIA final regulations are published.  In general, these interim policies are “binding” on 638 tribal contractors only to the extent that they are included in statute or Federal regulation, or have been explicitly incorporated into a tribal contract.

   As policy related questions are received from Headquarters, Area Offices and Service Units, the Director of Self-Determination Services (DSDS) may call a Leadership Team Meeting, comprised of designated representatives of all IHS Associate Directors, to examine issues as they arise and make recommendations for their resolution.

   The DSDS determines if an ISDM or ISDA is required, formulates the interim policy, and coordinates it with the Division of Management Policy (DMP) for issuance.

3. Current Policy References.  The following reference list from the Interim Guidebook reflects all current ISDMs, CPLs, and ISDAs.  ISDMs and ISDAs that are not specifically included in this reference list have been officially rescinded and should be discarded. Once the IHS/BIA joint regulations are officially approved, OTA/DSDS will consolidate all IHS 638 interim policies in the IHM, Part 4 -- Staff Services/Special Programs, Chapter 5 -- Office of Tribal Activities, which is reserved for this purpose.

IHS INTERIM GUIDEBOOK ON THE PUBLIC LAW 93-638 CONTRACTING PROCESS:

Chronological Index of Policies & Advisories

Policies

• ISDM 81-2 -- Planning for ISD activities
• ISDM 81-3 -- Contracting process under ISD
• ISDM 81-4 -- Minimum health standards
• ISDM 82-1 -- Funding ISD personnel
• ISDM 85-4 -- Nonrecurring personnel costs
• ISDM 87-1 -- Sample contract
• ISDM 87-3 -- Facilities planning/construction
• ISDM 88-2 -- Funding levels
• ISDM 89-1 -- FTCA coverage - medical and non-medical
• CPL 89-3 -- Interim guidance
• CPL 89-4 -- Provisions effective w/amendments
• CPL 89-5 -- Quarterly reconciliation reports
• CPL 90-2 -- Procurement integrity
• CPL 90-3 -- Use of ISD contracts
• CPL 90-6 -- Conversion to calendar years
• CPL 90-7 -- Construction/preaward reviews
• CPL 90-8 -- Review of decisions
• CPL 90-9 -- Contract simplification measures
• CPL 90-11 -- Contract management
• CPL 90-12 -- Clarification of CPL 90-9
• CPL 92-1 -- Coverage for medical and non-medical claims under the Federal Tort Claims Act, P.L. 93-638 contractors and grantee
• ISDM 92-2 -- Contract support cost policy
• ISDM 92-3 -- IHS Headquarters P.L. 93-638 leadership team

Advisories

• ISDA 2 -- Contractibility functions
• ISDA 3 -- Title to property
• ISDA 6 -- Information disclosure
• ISDA 10 -- Contractibility/health boards
• ISDA 12 -- Retirement contributions
• ISDA 14 -- Physicians comparability allowance
• ISDA 16 -- IPA assignments/no ISD contracts
• ISDA 17 -- Waiver of IPA requirements
• ISDA 18 -- IPA assignments to tribes
• ISDA 19 -- Adequacy of trained personnel
• ISDA 20 -- Severance pay
• ISDA 21 -- Personnel policies/retrocession
• ISDA 22 -- Charging Indians for services
• ISDA 23 -- Resolutions for renewals
• ISDA 24 -- Indian preference
• ISDA 25 -- Licensing
• ISDA 30 -- Conversion to calendar years
• ISDA 32 -- Interim clause for "method of payment" to be incorporated in Section G.2, "Sample 638 cost reimbursement contract" ISDM 87-1

5-5.20  TRIBAL SELF-GOVERNANCE COMPACTS

1. Policy  The Indian Self-Determination and Education Assistance Act Amendments of 1988, Public Law 100-472, amended the Indian Self-Determination and Education Assistance Act, Public Law 93-638, in part, by adding a new “Title III -- Tribal Self-Governance Demonstration Project.”
   1. As a result of this Public Law 100-472 amendment, the Department of the Interior, Bureau of Indian Affairs (BIA) was required to develop special policies and procedures that will govern contractual relationships with Indian tribes that choose to receive BIA funding support under a tribal self-governance compact.
   2. Public Law 100-472 did not include the IHS, or IHS programs, under the new Title III self-governance requirements.  In a subsequent amendment under Public Law 102-184, however, the Congress added a new Section 308 to Public Law 93-638.  This new Section directed the Secretary of HHS to conduct a study for the purpose of determining the feasibility of extending the self-governance demonstration project to include activities, programs, functions, and services of the IHS.  It also gave authority to establish within the IHS an Office of Self-Governance to be responsible for coordinating the activities necessary to carry out the study.
   3. Without benefit of the feasibility study, self-governance demonstration project authority was extended to the IHS by Public Law 102-573, the Indian Health Care Amendments of 1992.

      Under the Public Law 102-573 amendment, the Secretary of HHS is authorized to negotiate and implement a Compact of Self-Governance and Annual Funding Agreement with each participating tribe upon completion of an authorized planning activity or a comparable planning activity.  Up to thirty tribes could be selected to participate in the project.

   4. The Compacts and Annual Funding Agreements authorize a participating tribe to plan, conduct, consolidate, and administer programs, services and functions of the IHS that are otherwise available to Indian tribes and Indians under other Federal authorizing statutes.
   5. Agreements authorize a participating tribe to redesign programs, activities, functions or services and to reallocate funds for such programs, activities, functions or services.  The Agreements provide for payment of funds from one or more programs, services, functions, or activities in an amount equal to that which the tribe would have been eligible to receive under Self-Determination contracts and grants, including direct program costs, and for any funds which are specifically related to the provision by the IHS of services and benefits to the tribe and its members.
   6. The IHS is currently in the process of developing self-governance policies and procedures under the terms of Title III of P.L. 93-638, as amended.  The IHS has negotiated for FY 1995, and Calendar Year 1995, Compacts and Annual Funding Agreements with over thirty tribes.

5-5.21  GLOSSARY

TERM, WORD,
or CONCEPT

Definition

Reference to FAR or other authority.

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ACCEPTANCE

1. The act of accepting an offer.
2. The act of an authorized representative of the Government by which the Government, for itself or as agent for another, assumes ownership of existing, identified supplies tendered, or approves specific services rendered as partial or complete performance of the contract.

   FAR 46.101.

   ACQUISITION

   The acquiring by contract, with appropriated funds, of supplies or services (including construction) by and for the use of the Federal Government through purchase or lease, whether the supplies or services are already in existence or must be created, developed, demonstrated, and evaluated. Acquisition begins at the point when agency needs are established and includes the description of requirements to satisfy agency needs, solicitation, and selection of sources, award of contracts, contract financing, contract performance, contract administration, and those technical and management functions directly related to the process of fulfilling agency needs by contract.

   FAR 2.1.

   ACQUISITION PLAN

   A plan for an acquisition which serves as the basis for initiating the individual contracting actions necessary to acquire a system or support a program.

   FAR 7.104 and 1.105.

   ACQUISITION PLANNING

   The process by which the efforts of all personnel responsible for an acquisition are coordinated and integrated through a comprehensive plan for fulfilling the agency need in a timely manner and at a reasonable cost: includes development of an overall strategy for managing the acquisition.

   FAR 7.101.

   ADMINISTRATIVE LAW

   Rules, regulations. and decisions made by instrumentalities of the Federal Government that have the force and effect of law.

   FAR 46.101.

   ADVANCE PAYMENTS

   Advances of money by the Government to a contractor before, in anticipation of, and for the purpose of complete performance under one or more contracts.  They are expected to be liquidated from payments due to the contractor incident to performance of the contracts.  Since they are not measured by performance, they differ from partial, progress, or other payments based on the performance, or partial performance of a contract.

   FAR 32.102(a).

   AGENCY

   One party, known as the principal, appoints another party, known as an agent, to enter into a business or contractual relationship with a third party.  In Government contracting, the principal, agent, and third party are respectively the Government, Contracting Officer (CO), and contractor.

   AGREEMENT

   Negotiated understandings on terms and conditions that will be incorporated in forthcoming contracts between the two.  By definition, an agreement does not contain all the elements necessary to be considered a contract.  See Basic Agreement and Basic Ordering Agreement.

   ALLOCABLE COST

   A cost is allocable to a Government contract if it:

   Is incurred specifically for the contact;

   Benefits both the contract and other work, and can be distributed to them in reasonable proportion to the benefits received; or

   Is necessary to the overall operation of the business, although a direct relationship to any particular cost objective cannot be shown.

   FAR 31.201.4.

   AMENDMENT

   A change (correction, deletion, or addition) to any information contained in an IFB or RFP (or previous amendment thereto).  The amendment becomes part of the solicitation and any resulting contract.

   FAR 14.208 and 15.410.

   ANTI-DEFICIENCY ACT

   A law prohibiting the obligation of money in advance of any appropriation or in excess of the amount of an available appropriation.

   ANTI-TRUST VIOLATION

   Practices that eliminate competition or restrain trade, such as collusive bidding, follow-the-leader pricing, rotated low bids, collusive price estimating systems, and sharing of the business.

   FAR 3.301.

   APPROPRIATION

   Authority to obligate public funds that will result in immediate or future outlays.

   ASSIGNMENT OF CLAIMS

   The transfer or making over by the contractor to a bank, trust company, or other financing institution -- as security for a loan to the contractor -- of its right to be paid by the Government for contract performance.

   FAR 32.801.

   AUCTION

   A negotiation tactic prohibited under FAR 15.610. Prohibited auction techniques include:

   Indicating to an offeror a cost or price that it must meet to obtain further consideration;

   Advising an offeror of its price standing relative to another offeror (however, it is permissible to inform an offeror that its cost or price is considered by the Government to be too high or unrealistic);

   Otherwise furnishing information about other offerors' prices.

   FAR 15.610(d).

   AUDIT

   A review of a company’s accounting procedures, accounting practices, books, records, documents, and other evidence related to (a) cost or pricing data or (b) costs claimed to have been incurred or anticipated to be incurred in performing a contract.

   FAR 15.215.2.

   AUTHORIZATION LEGISLATION

   A law which permits the establishment or continuation of Federal programs and agencies.  Authorizing legislation is normally required before the enactment of budget authority, and such authority is normally provided in a separate appropriations act.

   AWARDING ACTIVITIES OFFICE

   Within the IHS, the term “Awarding Activities Offices” includes (1) the eleven IHS Area Offices and the Office of Health Program Research and Development (OHPRD) in Tucson, Arizona; (2) the Offices of Engineering Services (OES) within the PHS Regional Offices for Regions II, VI, and X; (3) the IHS Headquarters West in Albuquerque, New Mexico; and (4) the IHS Supply Service Center in Perry Point, Maryland.

   BASIC AGREEMENT

   A written instrument of understanding, negotiated between an agency or contracting activity and a contractor, that (1) contains contract clauses applying to future contracts between the parties during its terms and (2) contemplates separate future contracts that will incorporate by reference or attachment the required and applicable clauses agreed upon in the basic agreement.  A basic agreement is not a contract.

   BASIC ORDERING AGREEMENT (BOA)

   A written instrument of understanding, negotiated between an agency, contracting activity, or contracting office and a contractor, that contains (1) terms and clauses applying to future contracts (orders) between the parties during its term, (2) a description, as specific as practicable, of supplies or services to be provided, and (3) methods for pricing, issuing, and delivering future orders under the basic ordering agreement.  A basic order agreement is not a contract.

   BEST AND FINAL OFFER (BAFO)

   In competitive negotiations, proposals prepared by offeror in the competitive range following completion of discussions and receipt of a written request for BAFOs from the Contracting Officer.

   FAR 15.611.

   BID

   An offer in response to an Invitation for Bids.

   See definition of offer in FAR 2.1.

   BID GUARANTEE

   A form of security assuring that the bidder (a) will not withdraw a bid within the period specified for acceptance and (b) will execute a written contract and furnish required bonds, including any necessary coinsurance or reinsurance agreements, within the time specified in the bid, unless a longer time allowed, after receipt of the specified forms.

   FAR 28.001.

   BIDDER

   An offeror who submits a bid in response to an Invitation for Bids.

   BOARD OF CONTRACT APPEALS (BCA)

   An instrumentality of a Federal department or agency which hears contractor appeals of Contracting Officer decisions on claims arising under or relating to a contract subject to the Contract Disputes Act.

   BOND

   A written instrument executed by a bidder or contractor (the “principal”), and a second party (the “surety” or “sureties”), to assure fulfillment of the principal’s obligations to a third party (the “obligee” or “Government”), identified in the bond.  If the principal’s obligations are not met, the bond assures payment, to the extent stipulated, of any loss sustained by the obligee.

   FAR 28.001.

   BUY AMERICAN ACT

   An act requiring that only domestic end products be acquired for public use, except articles, materials, and supplies:

   For use outside the United States.

   For which the cost would be unreasonable, as determined in accordance with FAR 25.105.

   For which the agency head determines that domestic preference would be inconsistent with the public interest.

   That are not mined, produced, or manufactured in the United States in sufficient and reasonable available commercial quantities, of a satisfactory quality (see FAR 25.108.)

   Purchased specifically for commissary resale.

   CHANGE ORDER

   A written order signed by the Contracting Officer, directing the contractor to make a change that the Changes clause authorizes the Contracting Officer to order without the contractor’s consent.  A change order is an example of a unilateral modification (see Modification).

   FAR 43.101.

   CIVILIAN AGENCY ACQUISITION COUNCIL (CAAC)

   A council chaired by a representative of the GSA and consisting of members representing twelve civilian agencies, which, along with the Defense Acquisition Regulatory Council (DARC), has responsibility for maintaining the Federal Acquisition Regulation.

   CLAIM

   A written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to the contract.

   FAR 33.201.

   CLOSEOUT

   The process for closing out the contract file following physical completion (i.e., discharge) of a contract.

   FAR 4.804.

   CODE OF FEDERAL REGULATIONS (CFR)

   Codification of rules published in the Federal Register by the executive departments and agencies of the Federal Government.

   COLLUSION

   Any consultation, communication, or agreement between two or more offerors or competitors relating to proposed prices, the intention to submit an offer, or the methods or factors used to calculate the prices offered.

   FAR 52.203-2(a)(1).

   COMMERCE BUSINESS DAILY (CBD)

   A publication of the U.S. Department of Commerce in which Government agencies are required to announce (IFBs and RFPs) procurement invitations, contract awards, and sales of surplus property.  A new edition of the CBD is issued every business day.  Each edition contains about 500 to 1,000 notices.  Each notice appears in the CBD only once.

   Readers Guide in the CBD.

   COMMON LAW

   Decision handed down by judges in courts of law.

   COMPETENT

   An agent for a contracting party who, at the time of agreement is:

   Of sound mind,

   Free of the influence of drugs or alcohol, and

   Otherwise legally authorized to enter into the agreement on behalf of the party.

   COMPETITIVE RANGE

   All proposals that the CO determines have a reasonable chance of being selected for award, based on cost or price and other factors that were stated in the solicitation.  Unless the CO decides to award without discussions, the CO must conduct written or oral discussion with all responsible offerors who submit proposals within the competitive range.

   FAR 15.609 and 15.610.

   CONSIDERATION

   Anything of value that changes hands between the parties to a contract.

   CONTINGENT FEE

   Any commission, percentage, brokerage, or other fee that is contingent upon the success that the person or concern has in securing a government contract.

   FAR 3.401.

   CONTRACT

   A mutually binding legal relationship obligating the seller to furnish supplies or services (including construction) and the buyer to pay for them.  It includes all types of commitments that obligate the Government to an expenditure of appropriated funds and are in writing (unless otherwise authorized).  Contracts can include bilateral instruments, awards, and notices of awards, job, and task orders issued under basic ordering agreements, letter contracts, orders such as purchase orders that become effective when accepting in writing or when the contractor performs, and bilateral contract modifications.  Contracts do not include grants, cooperative agreements, or interagency agreements.

   FAR 2.1.

   CONTRACT CLAUSE

   A term or condition used in contracts or in both solicitations and contracts, and applying after contract award or both before and after award.  Clause states the right and obligations of the parties to a contract.

   FAR 52.101(a).

   CONTRACT MODIFICATION

   Any written change in the terms of a contract.  Unilateral modifications are signed only by the CO; bilateral by both parties.

   FAR 43.101 and 43.103.

   CONTRACT SCHEDULE

   The complete statement of the requirement in the solicitation, including not only the Statement of Work and Specifications, but also the terms and conditions with respect to packaging and marking, inspection and acceptance, deliveries or performance, contract administration data, and other special contract requirements.  The Schedule includes Sections A through H of the Uniform Contract Format.

   FAR 14.201-2, 14.201-9(b), and 15.406-2.

CONTRACT TYPE

1. The name of the compensation arrangement established by the terms and conditions of the contract, such as Firm fixed price, Fixed price redeterminable, Cost plus award fee, Cost plus fixed fee, or Cost plus incentive fee.
2. The name of the ordering arrangement established by the terms and conditions of an indefinite delivery contract, such as Definite Quantity, Indefinite Quantity, or Requirements.

   FAR 16.101 and 16.501(a).

   CONTRACTING

   The purchasing, renting, leasing, or otherwise obtaining supplies or services from nonfederal sources.  Contracting includes the solicitation and selection of sources, preparation and award of contracts, and all phases of contract administration.  It does not include making grants or cooperative agreements.

   FAR 2.1.

   CONTRACTING ACTIVITY

   An element of an agency designated by the agency head and delegated board authority regarding acquisition functions.

   FAR 2.1.

   CONTRACTING OFFICER (CO)

   An agent of the Government (see “agency”) with authority to enter into, administer, or terminate contracts and make related determinations and findings.  The term includes certain authorized representatives of the Contracting Officer acting within the limits of their authority as delegated by the Contracting Officer, such as Administrative Contracting Officer (ACO) who administers the contract or a Termination Contracting Officer (TCC who settles terminated contracts.)  A single Contracting Officer may be responsible for duties in any or all of these areas.

   FAR 2.1.

   COST

   The amount of money expended (outlay) in acquiring supplies or services.  The total cost of an acquisition includes:

   The dollar amount paid to the contractor under the terms and conditions of the contract;

   Any direct costs for acquiring the supplies or services not covered in the contract price;

   Any cost of ownership not covered in the contract price;

   The Government's overhead for awarding and administering the contract.

   COST ACCOUNTING STANDARDS (CAS)

   Standards for the measurement, assignment, and allocation of costs to contracts with the United States.  These standards are established by the Cost Accounting Standard Board and incorporated in Part 30 of the FAR.

   Section 26(a) of the Office of Federal Procurement Policy Act as amended.

   COST ANALYSIS

   The review and evaluation of the separate cost elements and proposed profit of (a) an offeror’s or contract’s cost or pricing data and (b) the judgmental factors applied in projecting from the data to the estimated costs in order to form an opinion on the degree to which the proposed costs represent what the cost of the contract should be, assuming reasonable economy and efficiency.

   FAR 15.801.

   COST OR PRICING DATA

   All facts as of the date of price agreement that prudent buyers and sellers would reasonably expect to affect price negotiations significantly.  Cost or pricing data are factual, not judgmental, and are therefore verifiable.  While they do not indicate the accuracy of the prospective contractor’s judgment about estimated future costs or projections, they do include the data forming the basis for that judgment.  Cost or pricing data are more than historical accounting data; they are all the facts that can be reasonably expected to contribute to the soundness of estimates of future costs and to the validity of determinations of costs already incurred.

   Examples of cost and pricing data:

   Vendor quotations;

   Information on changes in production methods and in production or purchasing volume;

   Data supporting projections of business prospects and objectives and related operations costs;

   Unit-cost trends such as those associated with labor efficiency;

   Make-or-buy decision.

   FAR 15.801.

   COST REALISM

   A critical evaluation of a contractor’s proposed cost to determine if contractor’s proposal reflects the buyer’s requirement, or if the contractor understands the complexity of the proposed work.

   COST REIMBURSEMENT CONTRACTS

   Contracts that provide for payment of allowable incurred costs, to the extent prescribed in the contract.  These contracts establish an estimate of total cost for the purpose of obligating funds and establishing a ceiling that the contractor may not exceed (except at its own risk) without the approval of the Contracting Officer.

   FAR 15.603-1.

   CURE NOTICE

   A notice of intent to terminate a contract for default unless the contractor “cures” the problem within 10 days (or more if authorized in writing by the Contracting Officer) after receipt of the notice from the Contracting Officer.

   FAR 49.607.

   DEBRIEFING

   Informing unsuccessful offerors of the basis for the selection decision and contract award.  This information includes the Government’s evaluation of the significant weak or deficient factors in the offeror’s proposal.

   FAR 15.1003.

   DEFECTIVE COST OR PRICING DATA

   Cost or pricing data that are inaccurate, incomplete, or noncurrent.

   FAR 15.804-7.

   DEFENSE REGULATORY ACQUISITION COUNCIL (DRAC)

   A council comprised of representatives of the Secretary of Defense, the Army, the Navy, the Air Force, the Defense Logistics Agency, and NASA.  Among other responsibilities, this council, along with the Civilian Agency Acquisition Council (CAAC), maintains the FAR.

   DELIVERY ORDER

   An order made pursuant to FAR 52.216-18 against an indefinite delivery contract.

   FAR 52.216-18.

   DESIGN SPECIFICATION

   A purchase description that establishes precise measurements, tolerances, materials, in process and finished product tests; quality control, inspection requirements, and other specific details of the deliverable.

   DISCHARGE OF A CONTRACT

   The obligations incurred by the parties when they entered into the agreement are excused, and the parties are no longer bound to perform as promised.

   DISCUSSIONS

   Any oral or written communication between the Government and an offeror, (other than communications conducted for the purpose of minor clarification) whether or not initiated by the Government, that (a) involves information essential for determining the acceptability of a proposal, or (b) provides the offeror an opportunity to revise or modify its proposal.

   FAR 15.601.

   ELEMENTS OF A CONTRACT

   Elements that must be present in a contract if it is to be binding.  These include:

   An offer;

   Acceptance;

   Consideration;

   Execution by competent parties;

   Legality of purpose;

   Clear terms and conditions.

   EVALUATION FACTORS

   Factors in selection of an offer for award.  See also Price-Related Factors and Technical Factors.

   FAR 15.605.

   EXCUSABLE DELAY

   Delay in performing, or failure to perform a contract, arising from causes beyond the control and without the fault or negligence of the contractor.

   FAR 52.249-8(c).

   EXECUTIVE ORDER (EO)

   An order issued by the President that establishes policies to be followed by executive agencies.

   FACTFINDING

   The process of identifying and obtaining information necessary to complete the evaluation of proposals.  If a prospective bidder makes inquires relative to other than readily available general information, it may be necessary to obtain specific information by communication with technical or other personnel in order to determine the appropriate response.  This may include factfinding sessions with offerors as provided in FAR 15.807a.

   FAR 15.807a.

   FEDERAL ACQUISITION COUNCIL

   A council comprised of the Administrator for Federal Procurement Policy, the Secretary of Defense, the Administrator of National Aeronautics and Space Administration, and the Administrator of General Services Administration.  Under the Office of Federal Procurement Policy Act, this council assists in the direction and coordination of Government-wide procurement policy and procurement regulatory activities.

   FEDERAL ACQUISITION REGULATIONS (FAR)

   Uniform policies and procedures for acquisition by executive agencies.  The FAR is jointly prescribed, prepared, issued, and maintained by the Department of Defense, the General Services Administration, and the National Aeronautics and Space Administration.

   FEDERAL REGISTER (FR)

   A daily Government publication that informs the public of proposed rules, final rules, and other legal notices issued by Federal agencies.

   FEDERAL SPECIFICATIONS (FED SPECS)

   Specifications and standards that have been implemented for use by all Federal agencies.  GSA lists them in the index of Federal Specifications, Standards, and Commercial Item Descriptions.

   FAR 10.001.

   FEDERAL SUPPLY SCHEDULES

   Indefinite delivery contracts established by the General Services Administration with commercial firms.  The Schedules are a required source for commonly used supplies and services, and provide Federal activities with a simplified process for obtaining such supplies and services at prices associated with volume buying.

   FAR 8.104.

   FEDERAL SUPPLY SERVICE (FSS)

   A functional division of the General Services Administration.  The FSS is responsible, on a Government-wide basis, for acquiring and maintaining stocks of certain supplies; for acquiring office furniture, and fixtures, and certain power and hand tools; for purchasing or leasing motor vehicles; and for establishing and maintaining “schedule” contracts.

   FEE (OR PROFIT)

   Money paid to a contractor over and above total reimbursements for allowable costs.

   FAR 15.901(a).

   FIRM FIXED PRICE CONTRACT

   A contract that establishes a price not subject to any adjustment on the basis of the contractor’s cost experience in performing the contract.

   FAR 16.202-1.

   FIXED PRICE CONTRACT

   A contract that establishes a firm price or in appropriate cases, an adjustable price.  Fixed-price contracts providing for an adjustable price may include a ceiling price, a target price (including target cost), or both.  Unless otherwise specified in the contract, the ceiling price or target price is subject to adjustment only by operation of contract clauses providing for equitable adjustment or other revision of the contract price under stated circumstances.  See also Firm Fixed Price Contract.

   FAR 16.201.

   FRAUD

   A felonious act of corruption, or an attempt to cheat the Government or corrupt its agents.

   FULL AND OPEN COMPETITION (FAOC)

   FAOC means that all responsible sources are permitted to compete (although some sources may be excluded as provided in FAR 6.2).

   FAR 6.003.

   FUNCTIONAL SPECIFICATION

   A purchase description that describes the deliverable in terms of performance characteristics and intended use, including those characteristics which are the minimum necessary to satisfy the intended use.

   GENERAL ACCOUNTING OFFICE (GAO)

   An office within the legislation branch that serves as “the watchdog for the Congress.”  Among other things, the GAO makes decisions on protests filed with it relative to any agency’s handling of IFB’s, audits agency programs and management, and makes recommendations on protests.  These decisions are referred to as Comptroller General Decisions because the Comptroller is the head of GAO.

   GENERAL SERVICES ADMINISTRATION BOARD OF CONTRACT APPEALS (GSBCA)

   The GSBCA is a board which, among other responsibilities, has statutory authority to hear protests filed with it relative to an agency’s handling of IFB’s for acquisition of automatic data processing (ADP) equipment or related resources.

   GOVERNMENT PROPERTY

   All property owned by or leased to the Government or acquired by the Government under the terms of the contract.  It includes both (1) Government-furnished property and (2) property acquired or otherwise provided by the contractor for performing a contract and to which the Government has title.

   FAR 45.101.

   GOVERNMENT FURNISHED PROPERTY

   Property in the possession of, or directly acquired by, the Government and subsequently made available to the contractor.

   FAR 45.101.

   INDEFINITE DELIVERY CONTRACT

   A type of contract used when the exact times and/or quantities of future deliveries are not known at the time of contract award.  There are three variations of indefinite delivery contracts:

   Definite-Quantity;

   Requirements, and

   Indefinite-Quantity.

   FAR 16.501(a).

   INSPECTION

   Examining and testing supplies or services (including, when appropriate, raw materials, components, and intermediate assemblies) to determine whether they conform to contract requirements.

   FAR 31.001.

   INVITATION FOR BID (IFB)

   The solicitation used in Sealed bidding.

   LABOR HOUR CONTRACT

   A variation of the time-and-materials contract differing only in that materials are not supplied by the contractor.

   FAR 16.602.

   LABOR SURPLUS AREA

   A geographic area identified by the Department of Labor in accordance with 20 CFR 654, Subpart A, as an area of concentrated unemployment, underemployment, or an area of labor surplus.

   FAR 20.101.

   LABOR SURPLUS AREA CONTRACTOR

   A contractor that together with its first tier subcontractors will perform substantially in a labor surplus area.

   FAR 20.101.

   LETTER CONTRACT

   A written preliminary contractual instrument that authorizes the contractor to begin immediately manufacturing supplies or performing services.

   FAR 16.603-1.

   LOAN GUARANTEES

   Guarantees made by Federal Reserve banks, on behalf of designated guaranteeing agencies, to enable contractors to obtain financing from private sources under contracts for the acquisition of supplies or services for the national defense.

   FAR 32.102(c).

   MARKET RESEARCH

   Collecting and analyzing available information about the entire market to satisfy minimum agency needs to arrive at the most suitable approach to acquiring, distributing, and supporting supplies and services.

   FAR 10.001.

   METHOD OF PROCUREMENT

   The process employed for soliciting offers, evaluating offers, and awarding a contract.  In Federal contracting, officers use one of the following methods for any given acquisition:

   Small purchase;

   Sealed bidding;

   Two-step sealed bidding;

   Negotiation.

   MILITARY SPECIFICATIONS (MIL SPECS)

   Specifications and standards maintained by DOD and published in the DOD Index of Specifications and Standards.

   FAR 10.001.

   NEGOTIATION

1. A bargaining process between two or more parties seeking to reach a mutually satisfactory agreement or settlement on a matter of common concern.
2. A method of procurement prescribed in Part 15 of the FAR that includes the receipt of proposals from offerors, permits bargaining, and usually affords offerors an opportunity to revise their offers before award of a contract.  Bargaining, in the sense of discussion, persuasion, alteration of initial assumptions and positions, and give-and-take may apply to price, schedule, technical requirements, type of contract, or other terms of a proposed contract.

   FAR 15.102.

   NONPERSONAL SERVICES CONTRACT

   A contract under which the personnel rendering the services are not subject, either by the contract’s terms or by the manner of its administration, to the supervision and control that usually prevails in relationships between the Government and its employees.

   FAR 37.101.

   OBLIGATION OF FUNDS

   Legally binding commitments, such as contract awards, made by Federal agencies during a given period that will require outlays during the same or some future period.

   OFFER

   A legally binding promise, made by one party to another, to enter into a contractual agreement, if the offer is accepted.  In Sealed bidding, offers made in response to Invitations For Bids (IFBs) are called “bids.”  In Negotiated acquisitions, offers made in response to a Request for Proposals (RFP) are called “proposals.”

   FAR 2.1.

   OFFICE OF ENGINEERING SERVICES (OES), DIRECTOR

   The regional OES Directors are responsible for administrative authorities relating to engineering, facilities planning, and construction activities (both Federally funded and direct Federal) and leasing in support of selected IHS operating components and other DHHS divisions.  These PHS components include the IHS, HRSA, CDC, and NIH, and the DHHS divisions include ACF and HCFA.

   OFFICE OF FEDERAL PROCUREMENT POLICY (OFPP)

   An organization within the Office of Management and Budget (OMB) that provides leadership and direction to Federal procurement programs.

   OFFICE OF INFORMATION RESOURCES MANAGEMENT (OIRM)

   A functional division of the General Services Administration.  OIRM is responsible, on a Government-wide basis, for the acquisition of automatic data processing equipment and related services, establishment of ADP-related schedule contracts, and the provision of telecommunications systems and services.

   OFFICE OF MANAGEMENT AND BUDGET (OMB)

   An office that recommends and monitors Federal programs and funding levels, develops and issues Government-wide policy guidance on management concerns, and reviews proposed regulations.

   OPTION

   A unilateral right in a contract by which, for a specified time, the Government may elect to purchase additional supplies or services called for by the contract, or may elect to extend the term of the contract.

   FAR 17.201.

   OUTLAYS

   Payments (e.g., checks issued, cash disbursed, and electronic fund transfers) by a Federal department or agency.

   PARTIAL PAYMENTS

   Payments for items received and accepted by the Government when the contractor has shipped part of the order.  Partial payments are generally treated as a method of payment and not as a method of contract financing.

   FAR 32.102(d).

   PAYMENT BOND

   A bond that ensures payments as required by law to all persons supplying labor or material in the performance of the work provided for in the contract.

   FAR 28.001.

   PERFORMANCE BOND

   A bond that secures performance and fulfillment of the contractor's obligations under the contract.

   FAR 28.001.

   PERFORMANCE SPECIFICATION

   A purchase description that describes the deliverable in terms of desired operational characteristics.  Performance specifications tend to be more restrictive than functional specifications, in terms of limiting alternatives which the Government will consider and defining separate performance standards for each such alternative.

   PERSONAL SERVICES CONTRACT

   A contract that, by its express terms or as administered, makes the contractor personnel appear, in effect, as Government employees.

   FAR 37.101.

   PREAWARD INQUIRY

   Questions and comments from prospective offerors about specifications, terms, and conditions in a solicitation received prior to the opening date of the IFB or closing date of the RFP.

   FAR 14.211 and 15.413.

   PREBID/PROPOSAL CONFERENCE

   A meeting held with prospective offerors before bid opening or before the closing date for submission of proposals.  Generally, the purpose of such meetings is to brief the offerors and explain complicated specifications and requirements.

   FAR 14.207 and 15.409.

PRICE

1. A monetary amount given, received, or asked for in exchange for supplies or services.
2. Cost plus any fee or profit applicable to the contract type.  Price analysis includes comparing the various bid prices; comparing current bid prices; with prices previously paid; and other price analysis techniques.

   FAR 15.801.

   PRICE ANALYSIS

   The process of examining and evaluating a proposed price without evaluating its separate cost elements and proposed profit.

   FAR 15.801.

PRICE COMPETITION, ADEQUATE

A competitive situation that exists if:

1. Offers are solicited;
2. Two or more responsible offerors that can satisfy the Government's requirements submit priced offers responsive to the solicitation's expressed requirements; and
3. These offerors compete independently for a contract to be awarded to the responsible offeror submitting the lowest evaluated price.

   If price competition exists, the Contracting Officer shall presume that it is adequate unless:

1. The solicitation is made under conditions that unreasonably deny to one or more known and qualified offerors an opportunity to compete;
2. The low offeror has such an advantage that it is practically immune from competition; or
3. There is a fInding, supported by a statement of the facts and approved at a level above the Contracting Officer, that the lowest price is unreasonable.

   A price is "based on" adequate price competition if it results directly form price competition or if price analysis alone clearly demonstrates that the proposed price is reasonable in camparision with current, recent prices for the same, or substantially the same items purchased in comparable quantities, terms and conditions under contracts that resulted from adequate price competition.

   FAR 15.84-3(b).

   PRICE-RELATED FACTOR

   When evaluating offers for award, any factor applied in identifying that offer which would represent the lowest total cost to the Government.  Examples include costs of inspection, transportation, and the cost of making multiple awards.  Any price-related factors must have been stated in the IFB.

   FAR 14.201-8.

   PROCUREMENT ACTION LEAD TIME (PALT)

   The time between (1) acceptance of a PR by the Contracting Officer, and (2) award of the contract.

   PROCUREMENT PLANNING

   Upon acceptance of the Purchase Request, the plan developed by a CO for soliciting offers, evaluating offers, and awarding a contract.

   PROFIT

   See Fee.

   PROGRESS PAYMENTS

   Payments made under a fixed price contract on the basis either of (1) costs incurred by the contractor as work progresses under the contract or (2) on physical progress in accomplishing the work.

   FAR 32.102(b).

   PROJECT OFFICER (PO)

   An agent of the Federal Government (see “Agency”) involved in the acquisition process.  A Project Officer is selected and appointed by a Contracting Officer based on qualifications, experience, and training.

   A Project Officer supports the Contracting Officer.  As a representative of the program office, he/she must ensure that program requirements are clearly defined and that the contract is designed to meet them.  A PO is responsible for ensuring that competitive sources are solicited, evaluated, and selected, and that the price the Government pays for the services it acquires is reasonable.  The PO establishes quality standards, delivery requirements, and makes sure that these are met.  While the contract is in force, the PO must ensure compliance with all contract provisions and applicable laws, and must report any deviations to the CO.

   PROTEST

   A written objection by an interested party to a solicitation, proposed award, or award of a contract.  Interested parties include actual or prospective offerors whose direct economic interests would be affected by the award of a contract or by the failure to award a contract.

   FAR 33.101.

   PUBLIC BUILDINGS SERVICE (PBS)

   A functional division of the General Services Administration.  PBS has broad responsibilities for acquiring, through purchase or lease, buildings, and other real estate for Federal departments and agencies, and for the maintenance of public buildings.

   PURCHASE DESCRIPTION

   Describe the essential physical characteristics or functions required to meet the Government’s minimum need.

   FAR 10.001.

   PURCHASE ORDER (PO)

   An offer by the Government to buy certain supplies or nonpersonal services and construction from commercial sources, upon specified terms and conditions, the aggregate amount of which does not exceed the small purchase limitation.

   FAR 13.101.

   PURCHASE REQUEST (PR)

   A requisition prepared by a requiring activity which (1) describes the supplies or services to be acquired, (2) certifies the availability of funds for the acquisition, and (3) includes other information, clearances, and approvals necessary for the CO to initiate the acquisition.

   QUALITY

   The extent to which the contract’s deliverable satisfies the actual minimum needs of the end users.

   QUALITY ASSURANCE (QA)

   Functions, including inspection, performed to determine whether a contractor has fulfilled the contract obligations pertaining to quality and quantity.

   FAR 46.101.

   REASONABLE COST

   A cost is reasonable if, in its nature and amount; it does not exceed that which would be incurred by a prudent person in the conduct of competitive business.

   FAR 31.201-3.

   REQUEST FOR PROPOSALS (RFP)

   The solicitation in negotiated acquisitions.

   REQUEST FOR QUOTATIONS (RFQ)

   A document used in soliciting quotations.  RFQs are used when the Government does not intend to award a contract on the basis of the solicitation but wishes to obtain price, delivery, or other market information as the basis for preparing a purchase order or for planning purposes.  A quotation received in response to an RFQ is not an offer and cannot be accepted by the Government to create a binding contract.

   RESPONSIBLE OFFEROR

   An offeror that meets the General and any Special Standards established under FAR 9.104.79.  To be determined responsible under the General Standards, a prospective contractor must:

   • Have adequate financial resources to perform the contract, or the ability to obtain them;
   • Be able to comply with the required or proposed delivery, or performance schedules, taking into consideration all existing commercial and governmental business commitments;
   • Have a satisfactory performance record;
   • Have a satisfactory record of integrity and business ethics;
   • Have the necessary organization, experience, accounting, and operational controls, and technical skills, or the ability to obtain them (including, as appropriate, such elements as production control procedures, property control systems, and quality assurance measures applicable to materials to be produced or services to be performed by the prospective contractor and subcontractor);
   • Have the necessary production, construction, and technical equipment and facilities, or the ability to obtain them; and
   • Be otherwise qualified and eligible to receive an award under applicable laws and regulations.

   FAR 9.101.

   RESPONSIVE

   A bid that complies in all material respects with the IFB.

   FAR 14.301(a).

   RISK

   The probability of not attaining the goals for which the party entered into a contract.  For the contractor (seller), the principal business or financial risk is an unexpected loss of money on the contract.  For the Government, the principal risks are that:

   • The total cost of the acquisition will be higher than expected or unreasonable in relation to the actual costs of performance;
   • The contractor will fail to deliver or will not deliver on time;
   • The final deliverable will not satisfy the Government’s actual need, whether or not “acceptable” under the terms and conditions of the contract;
   • The Government’s need will change prior to receipt of the deliverable.

   SEALED BIDDING

   A method of procurement prescribed in Part 14 of the FAR that employees competitive bids, public opening of bids, and awards. Under this method:

   • The CO issues an Invitation for Bids (IFB);
   • Offerors submit Sealed bids;
   • The bids are publicly opened;
   • Award is made to the responsible bidder whose bid, conforming to the Invitation for Bids, will be the most advantageous to the Government, considering only price and price-related factors included in the Invitation.

   FAR 14.101.

   SERVICE CONTRACT

   A contract that directly engages the time and effort of a contractor whose primary purpose is to perform an identifiable task rather than to furnish an end item of supply.

   FAR 37.101.

   SET-ASIDE

   An acquisition reserved exclusively for offerors who fit into a specified category.  Set-asides are commonly established for small businesses and businesses in labor surplus areas.

   FAR 19.501(a) and 20.201-1.

   SHOW CAUSE NOTICE

   A written delinquency notice, sent to the contractor immediately upon expiration of the delivery period, advising that the Government is considering termination for default, and affording the contractor the opportunity to show cause why termination for default should not occur.

   FAR 49.607.

   SMALL BUSINESS CONCERN

   A concern (including it affiliates) which is (1) independently owned and operated, (2) not dominate in the field of operation in which it is bidding on Government contracts, and (3) qualifies as a small business under the criteria and size standards in 13 CFR Part 121.

   FAR 19.001.

   SMALL PURCHASE

   The acquisition of supplies, nonpersonal services, and construction at or below the “small purchase limitation” through the simplified procedures (e.g., imprest funds, purchase orders, and blanket purchase agreements) prescribed in Part 13 of the FAR.

   FAR 13.101.

   SMALL PURCHASE LIMITATION

   The aggregate dollar amount of an acquisition at or below which small purchase contracting procedures may be used.  As of the start of FY 1994, the small purchase limitation was $25,000.  The small purchase limitation is established by regulation, and is prescribed in the FAR, Part 13.

   SOLICITATION PROVISION

   A term or condition used only in solicitations and applying only before contract award.  Provisions provide information to prospective offerors on such matters as:

   • Preparing and submitting offers;
   • The evaluation of offers and the offeror's right to protest award.

   FAR 52.101(a).

   SOCIOECONOMIC OBJECTIVES

   Any objective for an acquisition established by statute or by an Executive Order which is an addition to the innate goals (i.e., quality, cost, timeliness, risk, competition, and integrity) of the acquisition process.

   SOLE SOURCE

   A contract for the purchase of supplies or services that is entered into or proposed to be entered into by an agency after soliciting and negotiating with only one source.

   FAR 6.003.

   SOLICITATION

   A document requesting or inviting offerors to submit offers, basically consisting of: (1) a draft contract. and (2) provisions on preparing and submitting offers.

   SOURCE SELECTION

   The process of soliciting and evaluating offers for award.  Formal source selections usually involve the:

   • Establishment of a group (e.g., source selection board) to evaluate proposals;
   • Naming of a source selection authority, who might be the CO, the requiring activity manager, or a higher level agency official, depending on the size and importance of the acquisition.
   • Preparation of a written source selection plan.

   FAR 15.612.

   SPECIFICATION

   A description of the technical requirements for a material, product, or service that includes the criteria for determining whether the requirements are met.

   FAR 10.001.

   STANDARD

   A document that establishes engineering and technical limitations and applications of items, materials, processes, methods, designs, and engineering practices; including any related criteria deemed essential to achieve the highest practical degree of uniformity in materials or products, or the interchangeability of parts used in those products.

   FAR 10.001.

   STATEMENT OF WORK (SOW)

   The complete description of work to be performed under the contract, encompassing all specifications and standards established or referenced in the contract.

   STATUTE

   A law enacted by the legislative branch of Government and signed by the President; identified by a Public Law number.

   STOP WORK ORDER

   Under the clause at FAR 52.212-13, a written order to the contractor from the CO requesting the contractor to stop all, or any part, of the work called for by the contract for a period of 90 days after the order is delivered to the Contractor, and for any further period to which the parties may agree.

   SUBCONTRACT

   Any contract entered into by a subcontractor to furnish supplies or services for performance of a prime contract or a subcontract.  It includes but is not limited to the purchase order, changes, and modifications to purchase orders.

   FAR 44.101.

   SUBCONTRACTOR

   Any supplier, distributor, vendor, or firm that furnishes supplies or services to or for a prime contractor.

   FAR 44.101.

   SUPPLIES

   All property, except land or interest in land, including (but not limited to) public works, buildings, and facilities; ships, floating equipment, and vessels together with parts and accessories; aircraft, and aircraft parts, accessories, and equipment; machine tools; and the alteration or installation of any of the foregoing.

   FAR 2.1.

   SYNOPSIS

1. A brief description of the supplies and services to be acquired by contract.  The Synopsis also provides prospective offerrors with information on obtaining a copy of the IFB or RFP from the responsible contracting office.  Synopses are published in the commerce Business Daily (CBD).
2. A notice of award published in the CBD.

   FAR 5.201 and 5.301.

   TECHNICAL FACTORS

   Factors other than price-related used in evaluating offers for award.  Examples include technical excellence, management capability, personnel qualifications, prior experience, past performance, and schedule compliance.

   FAR 9.104-2 and 15.605.

   TECHNICAL LEVELING AND TRANSFUSION

   Negotiation tactics prohibited under FAR 15.610.  Technical leveling means helping an offeror to bring its proposal up to the level of other proposals through successive rounds of discussion, such as by pointing out weaknesses resulting from the offeror’s lack of diligence, competence, or inventiveness in preparing the proposal.  Technical transfusion means disclosing technical information supplied by one offeror (or otherwise pertaining to that offer) to other, competing offerors.

   FAR 15.610(d).

   TERMINATION FOR CONVENIENCE

   Generally, the exercise of the Government’s contractual right to completely or partially terminate a contract for the convenience of the Government.

   FAR 49.002.

   TERMINATION FOR DEFAULT

   Generally, the exercise of the Government’s contractual right to completely or partially terminate a contract because of the contractor’s actual or anticipated failure to perform its contractual obligations.

   FAR 49.401.

   TERMS AND CONDITIONS

   All language in a solicitation and contract, including amendments, attachments, and referenced clauses and provisions.

   TIME AND MATERIALS CONTRACT

   A type of contract that provides for acquiring supplies or services on the basis of (1) direct labor hours at specified fixed hourly rates that include wages, overhead, general and administrative expenses, and profits and (2) material handling costs as part of material costs.

   FAR 16.601(a).

   TIMELINESS

   Delivery of requisitioned supplies to the end user’s purpose, or performance of services at the time necessary for the end user’s purposes.

   TWO-STEP SEALED BIDDING

   A method of procurement prescribed in Section 14.5 of the FAR.  The two steps are as follows:

1. The CO issues a request for technical proposals.  Technical proposals received are evaluated, and, if necessary, discussed.
2. Sealed bids are solicited from only those sources that submitted acceptable proposals under step one.  Award is made as in Sealed bidding. UNALLOWABLE COST

   Any cost which, under the provisions of any pertinent law, regulation, or contract, cannot be included in prices, cost-reimbursements, or settlements under a Government contract to which it is allocable.

   FAR 31.001.

   UNIFORM CONTRACT FORMAT

   A format for preparing solicitations and contracts prescribed in FAR 14.201-1 and 15.405-1.

   UNSOLICITED PROPOSAL

   A written proposal that is submitted to an agency on the initiative of the submitter for the purpose of obtaining a contract with the Government and which is not in response to a formal or informal request.

   FAR 15.501.

5-5.22  INDEX Acquisition Planning, 5-1 to 5-9

• Annual, 5-1 to 5-3; 5-4 to 5-6

Acquisition Planning Document (ADP), 5-1, 5-3 to 5-4; 5-6 to 5-9

Anti-Trust Violations, 4-4

Architectural and Engineering Contracting, 10-1 to 10-5

• Contract award, 10-3 to 10-4;
• Evaluation Board, 10-2;
• Selection of A&E Firm, 10-3

Area Director, 3-4

Automated Data Processing (ADP) Contracting, 12-1 to 12-22;

Awarding Activities Offices, 1-2;

Blanket Purchase Agreements (BPAs), 8-11 to 8-12;

Buy Indian Policy, 6-1 to 6-3;

• Competition, 6-2
• Construction, 6-3; 11-4

Commerce Business Daily (CBD), 7-9; 11-5

• Synopsis, 7-11

Compacts, Tribal Self-Governance, 20-1 to 20-2

Conflict of Interest, 4-2

Contracting Officer (CO), 3-4; 3-5; 5-1; 5-6 to 5-9; 6-2; 7-2, 7-9; 7-13 to 7-22; 8-10; 8-12; 10-2 to 10-4; 11-4; 11-7 to 11-10; 15-1 to 15-3; 16-1 to 16-5; 17-1 to 17-10

Contracts (General), 7-1 to 7-23

Construction Contracting, 11-1 to 11-11

• Bonds, 11-6 to 11-7
• Buy Indian, 11-4
• Insurance, 11-7 to 11-8
• Planning, 11-2
• Preconstruction conference, 11-9 to 11-10
• Responsiveness versus Responsibility, 11-8 to 11-9

Contract Health Services, 13-1 to 13-48

Contract protests, disputes, appeals, 16-1 to 16-5

• Agency protests, 16-1 to 16-2
• GAO protests, 16-2
• GSA Board of Contract Appeals (GSBCA) protests, 16-2 to 16-3

Davis-Bacon Act, 11-2 to 11-3

Ethics, 4-1 to 4-8

Gratuities, 4-2 to 4-4

Head of the Contracting Activity (HCA), 3-2; 7-2

Imprest Fund, 8-12 to 8-13

Independent Government Cost Estimate (IGCE), 7-6 to 7-7

Justification for Other than Full and Open Competition (JOFOC), 7-10 to 7-11

Lease of motor vehicles, 18-2

Lease of Real Property, 18-1

Lease of personal property, 18-1 to 18-2

Letter Contracts, 7-16

Lobbying, 4-8

Negotiation, Contracting by, 7-13 to 7-16

Office of Federal Policy Act, 4-4; 4-7

Optional Form 347, 8-13 to 8-14

Pre-Negotiation Objectives Memorandum, 7-19

Principal Official Responsible for Acquisition (PORA), 1-3 to 1-4; 3-3 to 3-4; 7-2; 7-21; 15-1 to 15-3

Procurement Integrity, 4-4 to 4-8

Project Officer (PO), 3-5 to 3-6; 5-1; 5-6; 5-7 to 5-9; 7-5 to 7-8; 7-14; 7-17; 11-10; 17-2 to 17-7; 17-9 to 17-10

Post Award Guidance, 17-1 to 17-11

• Audit responsibilities, 17-10 to 17-11
• "Changes" clause, 17-4 to 17-15
• Closeout, 17-9 to 17-10
• Contract administration, 17-1 to 17-3
• Government property, use or acquire, 17-5 to 17-6
• Inspection and acceptance, 17-3 to 17-4
• Payments, 17-7 to 17-8
• Site Visits, 17-3
• Termination for convenience, 17-8
• Termination for default, 17-8 to 17-9

Purchasing Agent, 3-4 to 3-5

Regulatory Framework for IHS Acquisitions, 3-1 to 3-2

Requisition/Request for Contract (RFC), 3-6; 7-6; 8-4 to 8-5

Sealed Bidding, 7-11 to 7-12

• Two-Step Sealed Bidding 7-12 to 7-13

Self-Determination Contracts, 19-1 to 19-2

Senior Contracting Officer (SCO); 3-4; 5-4 to 5-6; 7-2; 9-1
SF 44 Purchase Order-Invoice-Voucher, 8-13

Small and Disadvantaged Business Utilization Specialist (SADBUS), 3-6

Small Purchases, 8-1 to 8-14

• Commercial Sources, 8-1 to 8-14
• Credit card use, 8-9
• Limitations on use, 8-2 to 8-3
• Services, Source Priorities, 8-9 to 8-10
• Small purchase limitation, 8-2 to 8-3
• Supplies, Source priorities, 8-5 to 8-9
• Ten Percent Rule, 8-3

Standards of Conduct, 4-1

Statement of Work (SOW), 7-5

Technical Evaluation, 7-17 to 7-18

Telecommunications Contracting, 12-1 to 12-21

Unauthorized Commitments, 15-1 to 15-3

• Approval process, 15-3
• Non-ratified commitments, 15-3
• Ratification process, 15-1 to 15-2

Urban Projects Contracts, 14-1 to 14-3

• Program income, 14-2 to 14-3