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Sara Brainard, Author at Ketel Thorstenson, LLP


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June 8, 20140

Sara BrainardAs described in Part I through VIII of our previous articles, 14 different compliance requirements could have a direct and material effect on federal grants received by governmental or non-profit organizations. Organizations that utilize Federal programs may need to comply with Procurement and Suspension and Debarment.  These requirements ensure goods and services allowable under a federal grant are obtained at the best cost meeting the quality, quantity, and time restraints, as well as being obtained from local vendors.  In addition, the requirements are intended to promote fair competition while minimizing the risk of exposure to fraud and collusion.
Procurement:

Procurement is the acquisition of goods or services from an external party.  Guidelines for procurement procedures are identified in A-102 Common Rule or OMB Circular A-110 (2 CFR part 215).  Specific requirements might also be included in the grant award or memorandum of understanding from the granting agency.  As a recipient of a grant award, organizations are responsible for:

  • Avoiding purchasing unnecessary items and ensuring the goods and services meet the quality requirements of the grant
  • Goods and services which exceed the simplified acquisition threshold (currently $100,000) are required to go through more stringent procurement, such as sealed bids or competitive proposals. Certain grants may require a bid guarantee or performance bond.
  • Maintaining procurement records. Records need to:

o    Identify the basis for contractor or vendor selection

o    Justify the lack of competition when competitive bids or offers are not obtained

o    State the basis for the award cost or price

 

In addition to requirements above, if the organization receives ARRA funds, additional conditions need to be met. As stated in the A-102 Common Rule and OMB Circular A-110, Section 1605, ARRA funds cannot be used for the construction, alteration, maintenance, or repair of a public building or work unless all of the iron, steel, and manufactured goods used in the project are produced in the United States.  This is known as the Buy-American Act.  Exceptions are available, such as non-availability, unreasonable cost, and certain international agreements.

 

Suspension and Debarment:

The Suspension and Debarment requirement is related to the Procurement requirement.  It prohibits organizations from making “covered transactions” with vendors that are prohibited from working on projects financed by federal funds.  “Covered transactions” are transactions that meet or exceed $25,000.  These transactions are not limited to construction and repair projects, and include goods and services an organization purchases throughout the year. When an organization enters into a covered transaction, the organization must verify the entity is not suspended or debarred or otherwise excluded.  This verification may be accomplished by checking the System for Award Management website (sam.gov) maintained by the General Services Administration (GSA), collecting a certification from the entity, or adding a clause or condition to the contract with the organization.  Through sam.gov, previously known as the Excluded Parties List System (EPLS), an organization can search for a specific vendor or extract a file to list all suspended and debarred vendors for a state or federal granting agency.

 

It is important to have the appropriate procedures in place to ensure vendors and contractors are researched prior to bids being awarded and purchases being made for goods and services.  In addition, the results of the website search, the certification, or condition/clause to the contract should be maintained in the vendor/contractor file to prove the organization’s due diligence in meeting this requirement.  Updated information should be obtained at least once a year or prior to any major project or award.

The Organization is responsible for ensuring the Procurement and Suspension and Debarment compliance requirements are met regardless of whatever the contract was performed by the organization or a subrecipient. See a future article on subrecipient monitoring.

 

See our previous newsletters and upcoming newsletter articles providing specific details on each of the 14 compliance requirements. Please contact Traci Hanson, Shelley Goodrich, or Sandra Weaver with specific questions.


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March 5, 20140

Sara BrainardOur compliance requirements series continues with Period of Availability, which is one of the 14 different compliance requirements that could have a direct and material effect on federal grants received by organizations. This requirement stipulates costs be incurred within a certain timeframe, be pre-authorized, or obligated.  Some federal awards and contracts allow a percentage of the funds to be held as carryover for future periods, while other awards and contracts may require excess funds be returned after project completion or the end of the funding period.

Federal awards and contracts may specify a time period an organization may use the federal funds.  Only costs resulting from obligations incurred during the funding period and certain authorized pre-award costs (such as engineering costs for a construction project), may be charged to federal funds.  Payment for these costs should be made within the allowable time periods as stipulated in the grant award or federal contract.  If costs are incurred outside the award period, the organization can request approval from the granting agency or make payment with non-federal dollars.

To ensure the appropriate costs are being allocated, consider the following processes:

  • Does the accounting system prevent or identify costs outside of the award period?
  • Are different account numbers used to record costs associated with different grant years?
  • Who reviews the disbursements? Is the person familiar with the availability requirements?
  • Are “end of period cut-offs” communicated with program managers?
  • Do management and program managers review budget-to-actuals throughout the award period?

If the organization has excess federal funds, the organization may have to return the monies to the federal granting agency.  The timeframe to return the funds can vary; however, funds are usually returned within 90 calendar days after project completion or the end of the award period.  The granting agency may extend this deadline upon request.

Some awards allow for grant funds to be considered as carryover for future periods.  In most instances there is a time limit for the carryover, but some awards also have a limit as to how much of the award can be carried to future periods.  A common example is Title I awards, which must be obligated during the 27 months from July 1 of the fiscal year through September 30 of the second following fiscal year.  In addition, no more than 15 percent of Title I funds can be carried over beyond the initial 15 months of availability.  For the Title I award, the granting agency may issue a waiver for the 15 percent limitation once in a three year period.

Period of Availability is inter-related with the Reporting federal grant compliance requirement.  The determination of excess funds to be returned and carryover allowances are determined during the closeout period of the grant.  Final amounts are calculated for the closeout reports, which may consist of financial and performance reports, and are communicated to the granting agency.  The Reporting requirement will be described in more detail as our series of Grant Compliance continues in subsequent newsletters.  Grant recipients should be cognizant of reviewing grant awards and federal contracts along with the OMB Circular A-133 compliance supplement and codified federal regulations to ensure they are meeting the appropriate requirements.


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