General Procurement Standards
The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327.
Procurement by States
When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds. The State will comply with §§ 200.321, 200.322, and 200.323 and ensure that every purchase order or other contract includes any clauses required by § 200.327. All other non-Federal entities, including subrecipients of a State, must follow the procurement standards in §§ 200.318 through 200.327.
Conflicts of Interest
The Uniform Guidance requires both Federal agencies and non-Federal entities to establish conflict of interest policies relating to the award or receipt of federal funds. Such policies regarding the selection and administration of contracts supported by the Federal award govern the conduct of the following parties:
Their immediate family member
An organization which employs or is about to employ any of these parties
An organization that is the parent, affiliate, or subsidiary organization of a non-Federal entity, which is not a state, local government, or Indian tribe
None of these parties may:
Participate in the selection, award, or administration of a contract if they have an interest, financial or otherwise, or stand to benefit, personally or tangibly, from a firm considered for a contract
Solicit or accept gratuities, favors, or anything of monetary value from contractors or parties to the subcontracts
Under the Uniform Guidance, non-Federal entities must:
Disclose any potential conflicts of interest to the Federal awarding agency and/or pass-through entities
Use their own discretion to set standards for situations in which the financial interest is not substantial, or the gift is an unsolicited item of nominal value
Discipline offending parties should standards of conduct be violated
The Uniform Guidance includes a number of mandates and suggestions encouraging agencies to be economical and responsible with their spending, including:
avoiding acquisition of unnecessary or duplicative items;
considering consolidating or breaking out procurements to obtain a more economical purchase;
considering lease options in lieu of purchasing;
investigating options for entering into state and local intergovernmental agreements or inter-entity agreements for procurement or use of common or shared goods and services;
using Federal excess and surplus property in lieu of purchasing new equipment; and
using value engineering clauses in contracts (for construction projects of sufficient size) to offer reasonable opportunities for cost reductions.
The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.
Competitive Bidding Requirements
All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of § 200.319 and 200.320.
Some of the situations considered to be restrictive of competition include but are not limited to:
Placing unreasonable requirements on firms in order for them to qualify to do business;
Requiring unnecessary experience and excessive bonding;
Noncompetitive pricing practices between firms or between affiliated companies;
Noncompetitive contracts to consultants that are on retainer contracts;
Organizational conflicts of interest;
Specifying only a “brand name” product instead of allowing “an equal” product to be offered and describing the performance or other relevant requirements of the procurement; and
Any arbitrary action in the procurement process.
The non-Federal entity must also conduct procurements in a manner that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in the evaluation of bids or proposals, except in those cases where applicable Federal statutes expressly mandate or encourage geographic preference. Some architectural and engineering services may be exempt from this requirement.
In order to ensure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft specifications, requirements, statements of work, or invitations for bids or requests for proposals must be excluded from competing for such procurements.
What Does the Uniform Guidance Say about Contractors?
Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.
Contracts must be award only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement. Consideration should be given to such matters as:
compliance with public policy,
record of past performance, and
financial and technical resources.
Awards, subawards, and contracts cannot be awarded to parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities (§ 200.214).
Entities awarding a time-and-materials type contract must assert a high degree of oversight in order to obtain reasonable assurance that the contractor is using efficient methods and effective cost controls.
Small and Minority Businesses, Women's Business Enterprises, and Labor Surplus Area Firms
The non-Federal entity must take all necessary affirmative steps to assure that small and minority businesses (SMB), women's business enterprises (WBE), and labor surplus area firms are used when possible.
These steps must include:
(1) Placing qualified SMBs and WBEs on solicitation lists;
(2) Assuring SMBs and WBEs are solicited whenever they are potential sources;
(3) Dividing total requirements, when economically feasible, into smaller tasks or quantities to permit maximum participation by SMBs and WBEs;
(4) Establishing delivery schedules, where the requirement permits, which encourage participation by SMBs and WBEs;
(5) Using the services and assistance, as appropriate, of such organizations as the Small Business Administration and the Minority Business Development Agency of the Department of Commerce; and
(6) Requiring the prime contractor (if subcontracts are to be let) to take the affirmative steps listed above.
All prequalified lists of persons, firms, or products used in acquiring goods and services must be current and include enough qualified sources to ensure maximum open and free competition. Also, the non-Federal entity must not preclude potential bidders from qualifying during the solicitation period.
What Does the Uniform Guidance Say about Giving Preference to Domestic Businesses?
As appropriate and to the extent consistent with law, the non-Federal entity should, to the greatest extent practicable under a Federal award, provide a preference for the purchase, acquisition, or use of goods, products, or materials produced in the United States (including but not limited to iron, aluminum, steel, cement, and other manufactured products).
These requirements must be included in all sub-awards, including all contracts and purchase orders for work or products under the award.
What Does the Uniform Guidance Say about Procurement Solicitations?
The non-Federal entity must have written procedures for procurement transactions. These procedures must ensure that all solicitations:
(1) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. In competitive procurements, the description must not contain features which unduly restrict competition.
The description may include a statement of the qualitative nature of the material, product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Detailed product specifications should be avoided if at all possible.
When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a “brand name or equivalent” description may be used as a means to define the performance or other salient requirements of procurement. The specific features of the named brand which must be met by offers must be clearly stated.
(2) Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals.
A non-Federal entity that is a state agency or agency of a political subdivision of a state and its contractors must comply with section 6002 of the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act.
The requirements of Section 6002 include:
procuring only items designated in guidelines of the Environmental Protection Agency (EPA) at 40 CFR part 247 that contain the highest percentage of recovered materials practicable, consistent with maintaining a satisfactory level of competition, where the purchase price of the item exceeds $10,000 or the value of the quantity acquired during the preceding fiscal year exceeded $10,000;
procuring solid waste management services in a manner that maximizes energy and resource recovery; and
establishing an affirmative procurement program for procurement of recovered materials identified in the EPA guidelines.
Special Compliance Requirements for Recovered Materials
What Does the Uniform Guidance Say about Contracts?
The non-Federal entity's contracts must contain the applicable provisions described in appendix II of Part 200.
The non-Federal entity may use a time-and-materials type contract only after a determination that no other contract is suitable and if the contract includes a ceiling price that the contractor exceeds at its own risk.
The non-Federal entity alone must be responsible, in accordance with good administrative practice and sound business judgment, for the settlement of all contractual and administrative issues arising out of procurements. These issues include, but are not limited to, source evaluation, protests, disputes, and claims.
Cost and Price
The non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold, including contract modifications.
The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals.
The non-Federal entity must negotiate profit as a separate element of the price for each contract in which there is no price competition and in all cases where cost analysis is performed.
Costs or prices based on estimated costs for contracts under the Federal award are allowable only to the extent described in subpart E of Part 200. The non-Federal entity may reference its own cost principles provided they comply with the Federal cost principles.
The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used.
For construction or facility improvement contracts or subcontracts exceeding the Simplified Acquisition Threshold, the Federal awarding agency or pass-through entity may accept the bonding policy and requirements of the non-Federal entity, provided that the Federal awarding agency or pass-through entity has made a determination that the Federal interest is adequately protected.
If such a determination has not been made, the minimum requirements must be as follows:
A bid guarantee from each bidder equivalent to five percent of the bid price. The “bid guarantee” must consist of a firm commitment such as a bid bond, certified check, or other negotiable instrument.
A performance bond on the part of the contractor for 100 percent of the contract price.
A payment bond on the part of the contractor for 100 percent of the contract price.
The non-Federal entity must have and use documented procurement procedures, consistent with the standards of §§ 200.317 - 200.320 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award.
When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required.
Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used.
Formal procurement methods include:
Sealed bids - Bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid is the lowest in price. This is the preferred method for construction procurement. For a detailed list of requirements, consult 2 CFR 200.320(b)(1).
Proposals - A fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. For a detailed list of requirements, consult 2 CFR 200.320(b)(2).
When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required.
The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost.
Informal procurement methods include:
Micro-purchases - a purchase of supplies or services, the aggregate amount of which does not exceed the micro-purchase threshold (consult 48 CFR 2.101 “Micro purchase threshold” for amounts).
Small purchases - The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. The non-Federal entity is responsible for determining an appropriate simplified acquisition threshold based on internal controls.
There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply:
(1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold;
(2) The item is available only from a single source;
(3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation;
(4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or
(5) After solicitation of a number of sources, competition is determined inadequate.
What does the Uniform Guidance Say about Federal Awarding Agency or Pass-Through Entity Reviews?
The Federal agency that awarded the grant, as well as pass-through entities overseeing subrecipients, may request the technical specifications on proposed procurements in order to ensure that the item or service specified is the one being proposed for acquisition. The non-Federal entity must make this information available for review upon request.
This review typically takes place prior to the time the specification is incorporated into a solicitation document. However, non-Federal entities may request a delay until after the solicitation has been developed, subject to approval by the pass-through entity or Federal agency.
In order to facilitate the review, the non-Federal entity must provide the reviewing agency with any relevant procurement documents, such as requests for proposals, invitations for bids, or independent cost estimates, when:
(1) The non-Federal entity's procurement procedures or operation fails to comply with required procurement standards;
(2) The procurement is expected to exceed the Simplified Acquisition Threshold and is to be awarded without competition; or
(3) Only one bid or offer is received in response to a solicitation;
(4) The procurement, which is expected to exceed the Simplified Acquisition Threshold, specifies a “brand name” product;
(5) The proposed contract is more than the Simplified Acquisition Threshold and is to be awarded to a bidder other than the apparent low bidder under a sealed bid procurement; or
(6) A proposed contract modification changes the scope of a contract or increases the contract amount by more than the Simplified Acquisition Threshold.
The non-Federal entity is exempt from the pre-procurement review if the Federal awarding agency or pass-through entity determines that its procurement systems comply with required standards.
The non-Federal entity may request that its procurement system be reviewed by the Federal awarding agency or pass-through entity to determine whether its system meets these standards in order for its system to be certified. Generally, these reviews must occur where there is continuous high-dollar funding, and third-party contracts are awarded on a regular basis.
The non-Federal entity may also choose to self-certify its procurement systems (this does not limit the Federal awarding agency's right to conduct a review). It must provide assurances, in writing, of compliance with required procurement standards. The non-Federal entity must cite specific policies, procedures, regulations, or standards as being in compliance with these requirements and have its system available for review.