§ 66.36
encourage participation by small and
minority business, and women’s busi-
ness enterprises;
(v) Using the services and assistance
of the Small Business Administration,
and the Minority Business Develop-
ment Agency of the Department of
Commerce; and
(vi) Requiring the prime contractor,
if subcontracts are to be let, to take
the affirmative steps listed in para-
graphs (e)(2) Gd) through (v) of this sec-
tion.
(f) Contract cost and price. (1) Grant-
ees and subgrantees must perform a
cost or price analysis in connection
with every procurement action includ-
ing contract modifications. The meth-
od and degree of analysis is dependent
on the facts surrounding the particular
procurement situation, but as a start-
ing point, grantees must make inde-
pendent estimates before receiving bids
or proposals. A cost analysis must be
performed when the offeror is required
to submit the elements of his esti-
mated cost, e.g., under professional,
consulting, and architectural engineer-
ing services contracts. A cost analysis
will be necessary when adequate price
competition is lacking, and for sole
source procurements, including con-
tract modifications or change orders,
unless price resonableness can be es-
tablished on the basis of a catalog or
market price of a commercial product
sold in substantial quantities to the
general public or based on prices set by
law or regulation. A price analysis will
be used in all other instances to deter-
mine the reasonableness of the pro-
posed contract price.
(2) Grantees and subgrantees will ne-
gotiate profit as a separate element of
the price for each contract in which
there is no price competition and in all
cases where cost analysis is performed.
To establish a fair and reasonable prof-
it, consideration will be given to the
complexity of the work to be per-
formed, the risk borne by the con-
tractor, the contractor’s investment,
the amount of subcontracting, the
quality of its record of past perform-
ance, and industry profit rates in the
surrounding geographical area for
similar work.
(3) Costs or prices based on estimated
costs for contracts under grants will be
28 CFR Ch. } (7-1-10 Edition)
allowable only to the extent that costs
incurred or cost estimates included in
negotiated prices are consistent with
Federal cost principles {see §66.22).
Grantees may reference their own cost
principles that comply with the appli-
cable Federal cost principles.
(4) The cost plus a percentage of cost
and percentage of construction cost
methods of contracting shall not be
used.
(g) Awarding agency review. (1) Grant-
ees and subgrantees must make avail-
able, upon request of the awarding
agency, technical specifications on pro-
posed procurements where the award-
ing agency believes such review is
needed to ensure that the item and/or
service specified is the one being pro-
posed for purchase. This review gen-
erally will take place prior to the time
the specification is incorporated into a
solicitation document. However, if the
grantee or subgrantee desires to have
the review accomplished after a solici-
tation has been developed, the award-
ing agency may still review the speci-
fications, with such review usually lim-
ited to the technical aspects of the pro-
posed purchase.
(2) Grantees and subgrantees must on
request make available for awarding
agency pre-award review procurement
documents, such as requests for pro-
posals or invitations for bids, inde-
pendent cost estimates, etc. when:
(1) A grantee’s or subgrantee’s pro-
curement procedures or operation fails
to comply with the procurement stand-
ards in this section; or
(ii) The procurement is expected to
exceed the simplified acquisition
threshold and is to be awarded without
competition or only one bid or offer is
received in response to a solicitation;
or
(iii) The procurement, which is ex-
pected to exceed the simplified acquisi-
tion threshold, specifies a “brand
name’’ product; or
(iv) The proposed award is more than
the simplified acquisition threshold
and is to be awarded to other than the
apparent low bidder under a sealed bid
procurement; or
(v) A proposed contract modification
changes the scope of a contract or in-
creases the contract amount by more
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