All recipients of federal awards should familiarize themselves with the changes in the Uniform Guidance. Even if your federal awards are passed through the state or another organization, Uniform Guidance applies to goods and services charged directly to federal awards. It does not apply to goods and services charged to indirect costs.
General procurement standards
Every non-federal entity receiving federal awards must have documented procurement procedures that reflect federal law, Uniform Guidance, and any state regulations.
Entities should focus on the most economical solution during the procurement process, and must avoid using federal funds for the acquisition of unnecessary items.
Entities are encouraged to consider the use of shared services and intergovernmental agreements to foster greater economy and efficiency.
Written conflict-of-interest policies are required. No employee or agent of the entity may participate in the selection, award, or administration of a contract funded by federal grant dollars if he or she has an actual or apparent conflict of interest.
The organization must document the procurement steps and activities required to be completed. This includes the basis for the type of procurement, contract type, and the basis for the contractor selection and price.
Micro-purchase: Purchases where the aggregate dollar amount does not exceed $3,500 (or $2,000 if the procurement is construction and subject to Davis-Bacon). When practical, the entity should distribute micro-purchases equitably among qualified suppliers. No competitive quotes are required if management determines that the price is reasonable. Each federal agency may raise the threshold for Micro-purchases.
Small purchase: Includes purchases up to the Simplified Acquisition threshold, which is currently $150,000. Informal purchasing procedures are acceptable, but price or rate quotes must be obtained from an adequate number of sources.
Sealed bids: Used for purchases over the Simplified Acquisition Threshold, which is currently $150,000. Under this purchase method, formal solicitation is required, and the fixed price (lump sum or unit price) is awarded to the responsible bidder who conformed to all material terms and is the lowest in price. This method is the most common procurement method for construction contracts.
Competitive proposals: Used for purchases over the Simplified Acquisition Threshold, which is currently $150,000. This procurement method requires formal solicitation, fixed-price or cost-reimbursement contracts, and is used when sealed bids are not appropriate. The contract should be awarded to the responsible firm whose proposal is most advantageous to the program, with price being one of the various factors.
Noncompetitive proposals: Also known as sole-source procurement, this may be appropriate only when specific criteria are met. Examples include when an item is available only from one source, when a public emergency does not allow for the time of the competitive proposal process, when the federal awarding agency authorizes, or after a number of attempts at a competitive process, the competition is deemed inadequate.
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About the Author
Derek Hilst, CPA is a Senior Manager in Wegner CPAs’ Assurance Department and leads the Rock County area office. He has over twelve years’ experience providing accounting, auditing and not-for-profit advisory services to clients throughout Wisconsin and Northern Illinois.