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The Uniform Guidance requirements are stringent, and noncompliance can be costly. Develop policies that can help keep you on the right side of the regulations.

Regulations

Four Key Considerations for Complying With Uniform Guidance Procurement Rules

  • Rebecca Field
  • 8/2/2018

In an age where use of federal funds and compliance with related regulations are highly scrutinized, it is important for organizations that receive federal funding to follow the Uniform Guidance requirements to the letter. These rules have evolved since they were issued, and will likely continue to, so keeping up with changes is an ongoing duty.

Procurement procedures that are compliant with federal regulations must include a litany of required elements, consider specific thresholds of purchases and their corresponding methodologies, and be implemented by designated dates.

If your organization uses federal funds, noncompliance with Uniform Guidance can cost you dearly in penalties and reputational damage. Vigilant awareness of the requirements can help you adopt compliant procurement policies and procedures and keep you on the right side of a federal review. Here are four of the most critical things your organization should do now to bring your procurement activities into compliance or verify that they are meeting the standard.

1. Know the “musts” of a properly documented policy

Your organization is required to have documented procurement procedures that reflect applicable state, local, and tribal laws and regulations, and your procurements must conform to federal law and procurement standards. You must also have written rules of conduct covering conflicts of interest and governing the actions of employees engaged in the selection, award, and administration of contracts.

Note that for procurements under a federal award, states and state agencies must follow the same policies used for non-federal procurements and meet other requirements indicated in the outlined standards. For all other organizations that receive federal funds, your documented procurement procedures and policies need to include the Uniform Guidance “musts,” which translates into these required elements:

  • Oversight must be maintained to ensure contractors perform in accordance with terms/conditions/specifications of contracts
  • Acquisition of unnecessary or duplicative items must be avoided
  • Contracts must be awarded only to responsible contractors
  • Records must be sufficiently maintained to detail the history of procurement
  • Transactions must be conducted in a manner providing full and open competition
  • Potential bidders must not be precluded from qualifying during the solicitation period
  • Procurements must be conducted in a manner that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences, except in cases where federal statutes mandate or encourage it
  • All solicitations must incorporate a clear and accurate description of technical requirements for the material, product, or service, and identify all requirements which the offerors must fulfill, and all other factors used in evaluating bids or proposals
  • All prequalified lists of persons, firms, or products which are used must be current and include enough qualified sources to ensure maximum open and free competition
  • Necessary affirmative steps must be taken to assure that minority businesses, women's business enterprises, and labor surplus area firms are used when possible
  • Cost or price analysis must be performed in connection with every procurement action in excess of the simplified acquisition threshold, including contract modifications
  • One of the five allowable procurement methodologies must be used

2. Use the proper procurement methodologies

The Uniform Guidance outlines five methods of procurement: micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive (sole source) proposals. Each methodology aligns with a dollar range for the purchase.

This table can assist your organization in determining what procurement methodology should be used when making purchases with federal funds.

Methodology Dollar Threshold Requirements
Micro-purchase Not to exceed micro-purchase threshold:
$0 – $10,000
  • No bid or quote required if price is considered to be reasonable. Reasonableness could be determined by comparing the price to past purchases or other published prices and/or requesting prices from more than one vendor.
  • Distributed equitably among a range of qualified vendors when practical
Small purchase procedure Greater than micro-purchase, not to exceed the simplified acquisition threshold:
$10,001 – $250,000
  • Price or rate quotes must be obtained from adequate number of sources (at least two)
  • Can be informal, e.g., phone call or web search
  • All quotes, including phone calls, web searches, etc., must be documented and kept on file
  • Price does not need to be deciding factor, but all quotes need to be kept in procurement records
Sealed bid Greater than the simplified acquisition threshold:
$250,001 and greater
  • Used when selection of successful bidder can be made principally on the basis of price
  • Bids must be solicited from an adequate number of known suppliers, providing sufficient response time
  • Local and tribal governments must publicly advertise bids
  • Invitation for bids must define the items or services in order for bidders to properly respond
  • All bids will be opened at time and place prescribed in invitation. Local and tribal governments must be opened publicly.
  • Firm fixed price contract made in writing to the lowest responsive and responsible bidder
  • Any or all bids may be rejected if there is a sound documented reason
Competitive proposal Greater than the simplified acquisition threshold:
$250,001 and greater
  • Must be publicized and identify all evaluation factors and their relative importance
  • Must be solicited from an adequate number of qualified sources
  • Must have a written method for conducting technical evaluations of the proposals and selecting recipients
  • Contracts must be awarded to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered
Noncompetitive proposal (sole source) Greater than micro-purchase threshold:
$10,000 and greater
  • May be used only when the item is available only from a single source, the public exigency or emergency will not permit a delay resulting from competitive solicitation, federal awarding agency or pass-through entity expressly authorizes its use in response to a written request, or after solicitation of a number of sources competition is determined inadequate
  • Justification of the use of noncompetitive proposal must be documented
  • Any research on availability from multiple sources must be documented
  • Documentation of authorization must be retained
  • Any initial solicitations from multiple sources which are concluded to be inadequate, and such reasoning, must be documented

3. Update your procurement policies to take advantage of recent threshold increases

OMB issued a memorandum on June 20, 2018, to implement the effect of the National Defense Authorization Acts (NDAA) of 2017 and 2018 on the procurement micro-purchase and simplified acquisition thresholds. This memo increased the micro-purchase threshold from $3,500 to $10,000 and the simplified acquisition threshold from $150,000 to $250,000. These threshold increases are effective immediately and apply to all categories of federal financial assistance subject to the Uniform Guidance requirements.

To operate under these higher thresholds, your organization must revise the sections of procurement policies that relate to Uniform Guidance requirements. Simply put, in order to use these higher thresholds, wherever your policies reference “$3,500” for the micro-purchase threshold, you should change the dollar amount to “$10,000.” And where your policies reference “$150,000” for the simplified acquisition threshold, edit the dollar amount to “$250,000.” Until you make those changes, you must continue to operate under the lower thresholds. Remember, you are subject to the “most restrictive rule,” so if your policy maintains the lower thresholds, you are bound by it, despite the increase in the thresholds authorized by OMB.

4. Meet the deadlines or take advantage of the grace period

Because of the significant increase in requirements from previous regulations, the OMB granted grace periods to allow organizations adequate time to update their procurement policies and procedures. The grace period is three full fiscal years that begin after December 26, 2014. So, organizations with fiscal year-end of December 31 had until January 1, 2018, to comply. Those with June 30 or September 30 fiscal year-ends have until July 1, 2018, and October 1, 2018, respectively. If you’ve used the grace period, you must document whether your organization used old or new standards in the interim, and ensure you are meeting the standard.

How we can help

Our team of grant compliance professionals can help you navigate the regulations, assist with documenting your policies and procedures, and provide insight tailored to your specific grants. 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.