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Procurement under Uniform Grant Guidance

Jeff YennieThe new Uniform Grant Guidance (UGG), which is effective for awards received after December 26, 2014, requires new policies and procedures for those entities receiving federal awards.  This article will focus on the procurement standards and the changes as a result of the new guidance.  An important note: a one-year grace period for implementation of the UGG procurement policies and procedures is available for an entity’s first full fiscal year that begins on or after December 26, 2014 (i.e. the first fiscal year for an entity with a June 30 year end, would be June 30, 2016).  However, to elect the grace period option, the non-profit or governmental agency must document in written form whether it is in compliance with the new or old standard, and must meet the documented standard.

The procurement standards require written standards of conflict of interest for its employees who are involved in the selection and award of contracts.  Conflicts of interest arise when an immediate family member or spouse is employed by, or has a financial interest in, a firm that is considered for an award.  The employee conflict of interest policy must be documented in written form.  A new policy as a result of the UGG is the Organizational Conflict of Interest Policy.  This requires that a written policy regarding conflicts of interest between organizations, such as parent companies, affiliates, or subsidiaries be developed and documented.

The procurement standards also encourage the use of surplus property and discourages the purchase of unnecessary or duplicate items. And as always, entities should be sure that awards are only given to responsible contractors who are not suspended and debarred.  Suspended and debarred vendors can be found at https://www.sam.gov.

UGG splits the procurement of goods and services into five categories: micro-purchases, small purchases, sealed bids, competitive proposals, and sole source.

  1. Micro-purchases are those purchases that are less than $3,000 and do not require any competitive quotes or bids as long as the price is considered reasonable and purchases are distributed equitably among qualified supplies.
  2. Small purchases are those purchases up to $150,000 and require price quotations from an adequate number of sources before a purchase decision is made. The quotes must be documented.
  3. Sealed bids are used for purchases over $150,000, but unlike “small purchases”, bids are publicly solicited.  A fixed-price contract should be awarded to the responsible bidder.  UGG makes note that sealed bids are the preferred method for construction projects funded with federal funds.
  4. Competitive proposals are used for purchases in excess of $150,000 and either a fixed-price or a cost-plus type contract is awarded.  A new requirement concerning competitive proposals is that the entity must have a written method for technically evaluating the proposals received and the selection of the contract award winner.  Contracts must be awarded to the responsible bidder most advantageous to the program, considering price and other factors.
  5. Non-competitive bids, or sole source purchases can only be used if the item is available from a single source, there is an emergency that cannot be delayed by the solicitation of bids, federal awarding agency authorizes non-competitive proposals in response to written request, or competition is inadequate after bids have been received from multiple sources.

The major changes to remember are to document whether your organization will be utilizing the one-year grace period, and to document the new Organizational Conflict of Interest Policy.  When making contract award decisions, documentation of the entire process is the fundamental step.

Future KT newsletters will review the additional aspects of the Uniform Grant Guidance. Please contact Traci Hanson, Shelley Goodrich, or Jeff Yennie with specific questions.

Jeff Yennie

Jeff Yennie

CPA at Ketel Thorstenson, LLP
Jeff is a graduate of the University of Wyoming with a Bachelor and Masters of Science in Accounting. He joined Ketel Thorstenson in 2012 and is a Manager in the Audit Department.
Jeff Yennie

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