OUR THOUGHTS ON:

Procurement Standards - Is Your NFP in Compliance?

Audit|Higher Education|Not-for-Profit

By Michael Withrow

In May 2017, the Office of Management and Budget (OMB) issued an additional one-year grace period for implementation of the procurement standards in 2 CFR 200.317 through 200.326.  As a result, the implementation date for the new procurement standards impacts fiscal years beginning on or after December 26, 2017.  For NFPs with June 30 year-ends that elected to defer implementation, this means the new standards went into effect on July 1, 2018.  These standards are in effect now, and if your organization hasn’t already updated the applicable standards and procedures, you need to take action immediately to be compliant. 

The new procurement standards were issued as part of the OMB’s comprehensive grant reform rules titled the “Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards” (Uniform Guidance).  Part of these reforms affected the procurement process and require non-federal recipients of federal funds to maintain formal documentation over their procurement procedures.

Required documentation includes the process for contractor selection and oversight, written employee conduct policies, conflict-of-interest policy, and a policy over procurement documentation retention. The contractor selection process must be in line with set acquisition thresholds and demonstrate full and open competition.  The new standards classify procurement under five different methods:

  • Micro-purchases (purchases of $3,500 or less):  No competitive quotes are required. The purchase is deemed acceptable if management deems the price reasonable.
  • Small purchases (purchases up to the Simplified Acquisition threshold, currently set at $150,000): Under this method, an informal process is acceptable; however, competitive bids must be obtained.
  • Sealed bids (purchases over the Simplified Acquisition threshold): Under this method, bids are publically solicited and the contract is awarded to the bidder that conformed to all of the material terms at the lowest price.
  • Competitive proposals (purchases over the Simplified Acquisition threshold): Under this method, formal solicitations are required; however, sealed bids are not appropriate, as price represents just one of the factors in selecting the most advantageous contractor.
  • Noncompetitive proposals: This process is only appropriate when specific criteria are met - such as an acquisition only being available from one source, during an emergency, or the competition is deemed inadequate.

The above thresholds are subject to change. For additional information regarding the procurement standards, refer to the full requirements per the Code of Federal Regulations:

https://www.gpo.gov/fdsys/pkg/CFR-2018-title2-vol1/pdf/CFR-2018-title2-vol1-part200-subpartD.pdf

https://www.gpo.gov/fdsys/browse/collectionCfr.action?selectedYearFrom=2018&go=Go

If you have any questions on the above material, please contact us, or reach out to your Schneider Downs team member, and we will be happy to assist your organization in meeting these new requirements.

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

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