Clock is Winding Down on Implementing Uniform Guidance Procurement Standards

After receiving four years of extensions, non-federal entities, including non-profit organizations, are running out of time to implement the procurement standards issued by the Office of Management and Budget (OMB), set forth in Title 2 of the U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).

Released in December 2013, the Uniform Guidance outlined standards for non-federal entities to follow when administering federal funds. Since its release, the OMB has delayed implementation of one standard of the Uniform Guidance related to the adoption of procedures that comply with the procurement standards. For fiscal years beginning on or after December 25, 2017 (e.g. December 31, 2018 for calendar year-end organizations, June 30, 2019 for mid year-end organizations), non-federal entities administering federal awards will be required to comply with the procurement standards of the Uniform Guidance.

Included in Subpart D, Sections 200.317-200.326 of the Uniform Guidance, the procurement standards have the following key requirements:

• Document procedures that align with federal, state and local laws. These procedures must include language covering conflicts of interest and whom within the non-Federal entity will be responsible for performing the selection process;
• Establish a process of procuring supplies or services that allows for competition among those wishing to enter the bidding process and eliminates unfair competitive advantages; and
• Maintain detailed records of the procurement process, including the identity of the contractor selected and reason for selection.

Additionally, the standards define the methods of procurement that a non-federal entity must follow. A micro-purchase, which is the purchase of supplies or services using simplified acquisition procedures, can be made without obtaining competitive bids if the price is reasonable, but should be distributed among qualified suppliers.

Small purchases are the purchase of supplies or services which do not exceed the simplified acquisition threshold. Section 200.88 of the Uniform Guidance defines the simplified acquisition threshold as a dollar amount below which a non-federal entity may purchase property or services using small purchase methods. Non-Federal entities making purchases below that threshold are required to obtain price quotes from an adequate number of qualified sources. The number of adequate sources should be defined by the non-federal entity, in its documented procedures.

When it comes to the thresholds for both micro-purchases and small purchases, the Uniform Guidance includes language that allows for the OMB to adjust both the micro-purchase and simplified acquisition thresholds for inflation. The original micro-purchase threshold was $3,000 and the original simplified acquisition threshold was $150,000. The most-recent adjustment to both thresholds was in June 2018, when the OMB issued a memorandum increasing the micro-purchase threshold to $10,000 and the simplified acquisition threshold to $250,000 in accordance with statutory changes set forth in the National Defense Authorization Acts.¹

Non-federal entities procuring supplies or services exceeding the inflation-adjusted simplified acquisition threshold have the option to complete the procurement process via sealed bids or a competitive proposal process. Sealed bids must be solicited publicly and the contract is awarded to the lowest conforming bid in a fixed fee contract. Competitive proposals can be performed by the non-Federal entity obtaining multiple offers from qualified sources. Non-federal entities would award a fixed fee or cost reimbursement contract to the bidder providing the most advantageous proposal. In limited circumstances, the Uniform Guidance does allow for non-competitive proposals, which is outlined in Section 200.321. The standards also require the non-federal entities to perform a cost or price analysis for every procurement over the simplified acquisition threshold.

Lastly, the Uniform Guidance emphasizes that a non-federal entity must take steps to award contracts to minority businesses.