Demolition/Abatement Constracts (Folders 1-2)

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(b) An option may not be exercised unless the grantee has determined that the option price is better than prices available in the market or that the option is the more advantageous offer at the time the option is exercised. 10. CONTRACT COST AND PRICE ANALYSIS FOR EVERY PROCUREMENT ACTION. Grantees must perform a cost or price analysis in connection with every proeurement action, including conVact modifications. The method and degree of anatysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, grantees must make independent estimates before receiving bids or proposals. a Cost Analysis. A cost enalysis must be performed when the offeror is required to submit the elements (i.e., Labor Hours, Ova}~eac~ Mate:ials, etc.) of the estimatsd cost, e.g., under professional consulting and architectural and engineering services contracts. A cost analysis will be necessary when adequate price competition is lacking and for sole source procurements, inctuding oonh~ct modifications or change orders, unless price reasonableness can be established on the basis of a catalog or market price of a commercial product sold in substantial quantities to the gentral public or on the basis of prices set by law or regulation. b. Price Analysis. A price anatysis may be usad in all other instances to determine the reasonableness of lhe proposed contract price. c. rofit. Grantees will negotiate prafit as a separate element of the price for each contract in which there is no price competition and in a11 cases where c~ost analysis is perfonned. To establish a fair end reasonable profit, consideration will be given to the cornplexiry of the wak to be performed, the risk borne by the contractor, the contractor's investment, the amount of subcaitracting, the quality of its racord of past perfonnance, and industry profit rates in ihe surrounding geographical area for similar work. d Federal Cost Principles. Costs or prices based on estimated costs for contracts under grants will be allowable only to the ex~lt ihat ~osts inc~ or oosc estimatrs included in negotiated prices ere consistent with Federal cost principles. Grantees may refcrence their ovm cost ptinciples that comply with applicable Fedecsl cost principles. e. Cost Plus Percenta~e of Cost Prohibited The cost plus a percentage of cost and percentage of conswction cost methods of contracting shall not be used. i l. BONDING REQUIREMENTS. For those construction or facility improvement contracts or subconvacts exceeding $100,000, FTA may eccept the bonding policy and requirat~ents of the grantee, pt+ovided that they meet the minimum requirements for constivction contracts as follows: a A bid guarantee from each bidder a~uivalent w fiv~e (5) percent of the bid price. The "bid guarantee" shall consist of a firm commitment such as a bid bond, certified check, or other negotiable instrument accompanying a bid as assurance that the bidder will, upcm acceptance of his bid, eacecute such contractual documents as mey be required within the time spec~ed; b. A perfonnance bond on the part of the contractor for 100 pq~eent of the contract price. A"performance bond" is one executed in connection with a contract to secure fulfillment of all the contractor's obligadons under such contract; and c. A payment bond on the part of the contractor. A payment bond is one executed in connection with a contract to assure payment, as required by law, of all persons supplying labor and mataial in the execution of the work provided for in the contract. Payment bond emounts required from contractors are as follows: (1) 50% of the contract price if the contract price is not more than ~ 1 millicm; (2) 40% of the contract price if the contract price is more than S 1 million but not more than $5 million; or (3) 52.5 million if the contract price is more than SS million. d. A cash deposit, certifiod check or other negotiable insUvment may be accxpied by a grantee in lieu of performance and payn~ent bonds, provided the grantce has established a procedure to assure that the interest of FTA is adequately protected.