Documenting Federal Procurement Policies at Charter Schools
Many charter schools are understandably still grappling with federal awards procurement compliance, ever since the OMB issued its Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (commonly called Uniform Guidance) back in 2014. The regulations can be confusing and intimidating, particularly as they relate to documenting policies and procedures.
Documentation applies to all federal awards, so it’s important that your school understands what’s involved. Uniform Guidance includes four key documentation provisions that must be followed to the letter.
The guidance includes written procedures for implementing payment requirements (2 CFR §200.305), which are designed to prevent federal awards from earning interest or not being spent in a timely manner. The provision states that payment methods must minimize the time elapsing between the transfer of funds from the U.S. Treasury or the pass-through entity and the disbursement by your charter school, whether the payment is made by electronic funds transfer, issuance or redemption of checks or warrants, or by other means.
2. Subpart E — Cost Principles
Your charter school must have written procedures for determining the allowability of costs in accordance with Subpart E and the terms and conditions of the federal award. OMB takes the fundamental premise that your charter school is responsible for the efficient and effective administration of the federal award through the application of sound management practices.
The application of these cost principles should require no significant changes in your internal accounting policies and practices. However, your school’s accounting practices must be consistent with these cost principles and support the accumulation of costs as required by the principles, and must provide for adequate documentation to support costs charged to the federal award.
A sound approach to checking compliance with this requirement is to read the basic considerations as well as direct and indirect cost considerations under the code.
3. General procurement standards
Charter schools are required to have procurement procedures governing the purchase of goods or services with federal awards. This is a very common policy that is already in place at most charter schools, but there are specific federal compliance requirements that should be checked to confirm that your current policy covers all Uniform Guidance requirements.
Procurement standards require that:
- The purchase complies with your school’s documented procedures
- The purchases is necessary
- There is open competition among vendors (to the extent required by each method, see below)
- A conflict-of-interest policy is in place (see last item for more information)
- Proper documentation for the purchases is maintained
Your school must use one of the following methods of procurement:
- Micro-purchases — Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (currently increased to $10,000; however, to use this amount it must be documented in your policy). To the extent practicable, you must distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive quotations if your school considers the price to be reasonable.
- Small purchase procedures — Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. The small purchase threshold was recently increased to $250,000.
- Sealed bids (formal advertising) — Bids are publicly solicited and a firm, fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest. The sealed bid method is the preferred method for procuring construction, if certain conditions apply.
- Competitive proposals — The technique of competitive proposals is normally conducted with more than one source submitting an offer, and either a fixed-price or cost-reimbursement type contract is awarded. It is generally used when conditions are not appropriate for the use of sealed bids. If this method is used, there are requirements that apply.
- Noncompetitive proposals — Procurement by noncompetitive proposals is through solicitation of a proposal from only one source and may be used only when one or more of the following circumstances apply: (1) The item is available only from a single source; (2) the public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation; (3) the federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request from your school; or, (4) after solicitation of a number of sources, competition is determined inadequate.
General procurement standards also state that your charter school must award contracts only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement. Consideration will be given to such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources.
4. Standards of conduct
Your school very likely has a policy in place relating to standards of conduct covering conflicts of interest and governing the actions of employees engaged in the selection, award, and administration of contracts. Many schools, however, need to make some revisions to truly be in compliance.
Under Uniform Guidance, no employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a federal award if he or she has a real or apparent conflict of interest. Also, if your charter school has a parent, affiliate, or subsidiary organization that is not a state or local government or Indian tribe, you must maintain written standards of conduct covering the organizational conflicts of interest. Organizational conflicts of interest occur when relationships with a parent company, affiliate, or subsidiary organization make it appear that your charter school is unable be impartial in conducting procurement action involving a related organization.
How we can help
Documenting your procurement policies and procedures is a huge part of federal compliance. CLA’s charter schools and grant compliance professionals can help you develop proper procedures and practices to keep you on the right side of the regulations. We have identified other grant issues that most concern you and developed methods and tools, including a Uniform Guidance implementation checklist, articles, recorded webinars and presentation slides, and a subrecipient risk assessment matrix to help you meet these challenges.