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Posted by on Mar 25, 2015

Procurement Policies and the Uniform Guidance

In a previous blog post, we discussed changes to procurement policies in the 2 CFR Part 200 – Uniform Guidance: Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). We explained the five procurement methods and other new requirements to which non-Federal entities (NFEs) need to tailor their policies. I’m going to go into more detail about what policies your organization may need to create or change and how to make those adjustments.

If you work for a state government, you will have an easier adaptation to the new regulations. According to 2 CFR 200.317, states should use the same procurement procedures on Federal projects that they use for non-Federal funds. One small exception is that states must endeavor to procure goods made with recovered materials, in accordance with 2 CFR 200.322.

Other NFEs will have a bit more work to do to ensure compliance with the Uniform Guidance procurement requirements. Luckily, OMB has allowed a one-year grace period for these entities to adjust their policies. NFEs other than states must use their own documented procurement procedures which must comply with all applicable local, state, and Federal laws. You should review the Procurement Standards section of Subpart D of the Uniform Guidance, especially 2 CFR 200.318, for all the important provisions you will need to cover in your policies. Two of the key requirements from this section are avoiding conflicts of interest and ensuring competition.

In the Uniform Guidance, a conflict of interest occurs when an “employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract.” (2 CFR 200.318(c)(1).)

One of the most important elements of your updated procurement policy will be the provision regarding conflicts of interest. The Uniform Guidance requires every NFE to have “written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts.” Your policy must ensure that employees will not participate in procurements where there is a real or perceived conflict of interest. Your organization will need to define and document some important determinations, such as the limit for when an item has substantial financial value. Finally, your policy must include disciplinary procedures to be followed in the event that a conflict is discovered. Make sure that you read 2 CFR 200.318(c) thoroughly to understand the full extent of these new requirements before revising your current policy. You may also wish to consult your organization’s attorney.

Secondly, OMB requires in 2 CFR 200.319 that all organizations to have a fair and well-documented procurement policy will ensure that “all procurement transactions must be conducted in a manner providing full and open competition.” This means that your organization may not allow contractors who contributed to a request for proposal in any way to bid on that particular project. You may not make the qualifications for a successful bid unnecessarily burdensome, nor may you give geographical preference in your award of a contract, except as required by Federal law. Make your contract solicitations clear, accurate, and thorough, so that potential bidders will know your exact requirements and whether or not they possess the right qualifications.

Adjusting your organization’s procurement policies to meet the Uniform Guidance requirements may feel like a daunting task. However, making the effort now to create clear, well-documented procedures will greatly benefit your organization in the long run improving day-to-day management and setting yourself up for clean audits.

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