You Got a Grant, Now How Do You Spend It? Let’s Talk Procurement Grants Management Track 2018 National Homeland Security Conference Victoria Roth Attorney Advisor FEMA Office of Chief Counsel July 12, 2018

Rules of the Road Please ask questions as they arise during the presentation— there is no need to wait until the end to ask them This presentation (including slides & oral information conveyed) provides general information about the procurement requirements applicable to FEMA grants This presentation is not intended to be, nor should it be considered as, legal advice You should not act or rely on information contained in our presentation (written or oral) without seeking the advice of your own attorney

Agenda Purpose Importance of Rules Background on Procurement Rules Overarching Questions Prior Rules Current Rules Discussion of Rules Common Issues

Purpose Of Presentation: Of Rules: Provide a broad overview of Federal procurement standards applicable to recipients and subrecipients when they procure goods or services under FEMA grants Explain why these rules are important Of Rules: More than about obtaining the lowest price Purpose also includes the furtherance of other objectives (e.g., full & open competition; socioeconomic inclusion; prevent favoritism, collusion, fraud, waste & abuse)

Importance of Rules Newsroom DHS OIG audits of FEMA grants Consequences Enforcement actions, such as loss of funding

Background: Overarching Questions What does “Uniform Rules,” “Super Circular,” or “Omni Circular” mean? What do these rules cover? What does “procurement under grants” mean? Where do these rules come from and where can I find them? Have these rules changed over the years?

Background: Government-Wide Grants Rules 3 Main Categories Administrative Requirements (incl. Procurement Standards) AKA “Grants Management Common Rule” (prior rules) AKA “Uniform Administrative Requirements” (current rules) Cost Principles Audit Requirements Prior Rules: Scattered Across Circulars & Regulations Current Rules: Mostly in 2 C.F.R. pt. 200 Grant Applications Financial Management Property Standards Reporting & Monitoring Procurement Standards Closeout

Background: Prior Rules (Disasters/Grants Issued Before Dec. 26, 2014) OMB Circular/Regulation Description A-21 & 2 C.F.R. pt. 220 Cost Principles for IHEs A-50 Audit Follow-Up A-87 & 2 C.F.R. pt. 225 Cost Principles for State/Local/Tribal Gov’ts A-89 Federal Domestic Assistance Program Info A-102 & 44 C.F.R. pt. 13 (for FEMA) Grant Mgmt Common Rule for State/Local/Tribal Gov’ts A-110 & 2 C.F.R. pt. 215 Grant Mgmt Common Rule for IHEs, Hospitals & PNPs A-122 & 2 C.F.R. pt. 230 Cost Principles for Nonprofits A-133 Single Audits Procurement: 44 C.F.R.§ 13.36 Procurement: 2 C.F.R. §§ 215.40-.48

Background: Prior Locations for Grant Management Common Rule

Background: Current Rules (Disasters/Grants Issued on/after Dec Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Located at 2 C.F.R. pt. 200 Some agencies adopted them as is, including DHS Some agencies obtained exceptions & have slightly modified versions Supersede most prior circulars/ rules Grace Period New OMB Exemptions

Summary of Procurement Standards States (state agencies, instrumentalities of the state, and territories) Other Non-Federal Entities (local governments, tribal governments, IHE, hospitals, and other nonprofit organizations) 2 C.F.R. § 200.317 2 C.F.R. §§ 200.318 through 200.326 Synopsis: (1) Must follow same policies and procedures it uses for procurements from its non-Federal funds; (2) Comply with § 200.322 (procurement of recovered materials); and (3) Include any clauses required by § 200.326 (contract provisions) (1) Must follow its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations; and (2) Provided that the procurements conform to applicable federal law and the standards identified in 2 C.F.R. §§ 200.318 through 200.326 Note: “State” – means any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, U.S. Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and any agency or instrumentality thereof exclusive of local governments.

Interplay Between Federal Rules & State/Local/Tribal Rules The Federal procurement standards address only a small portion of the procurement rules that possibly apply to a procurement If the Federal procurement standards do not address nor prohibit a concept, it is generally not a Federal requirement Sometimes the narrowest rule is Federal, sometimes it’s state, local, or tribal Federal Procurement Standards State Procurement Standards Local Procurement Standards If the rules overlap, however, the local, tribal, or nonprofit must follow the rule that allows them to be in compliance with all applicable layers (often referred to as following the most restrictive standard) It does NOT mean following only one set of standards instead of another—some Federal standards may be more restrictive than state/local/tribal, and some may be less restrictive

Interplay Between Federal Rules & State/Local/Tribal Rules Cont’d Recipients and subrecipients cannot waive the Federal procurement requirements Even if a state waives state procurement standards or a local government waives local procurement standards, recipients and subrecipients must still comply with the applicable Federal procurement standards found at 2 C.F.R. §§ 200.318-.326 when using grant funds.

Overview of Standards The procurement standards can be broken down into the following categories: General procurement standards (2 C.F.R. § 200.318) Competition (2 C.F.R. § 200.319) Methods of procurement (2 C.F.R. § 200.320) Contracting with small and minority businesses, women’s business enterprises, and labor surplus area firms (2 C.F.R. § 200.321) Procurement of recovered materials (2 C.F.R. § 200.322) Contract cost and price (2 C.F.R. § 200.323) Awarding agency and pass-through entity review (2 C.F.R. § 200.324) Bonding requirements (2 C.F.R. § 200.325) Contract provisions (2 C.F.R. § 200.326 and Appendix II)

Common Issues: Noncompetitive Procurements Piggybacking (2 C.F.R.§200.319(a)) Awarding to contractors that drafted solicitation documents (2 C.F.R.§200.319(a)) Using noncompetitive pre-existing or retainer contracts (2 C.F.R.§200.319(a)) Making out-of-scope changes to existing contracts (2 C.F.R.§200.319(a)) Using prohibited local geographic preference (2 C.F.R.§200.319(b) Continuing to use sole source contract after exigency/emergency ended (2 C.F.R.§200.320(f)(2))

Other Common Issues Using state supply schedules/cooperative purchasing agreements that do not comply with rules applicable to non-State entities (i.e., 2 C.F.R. §§ 200.318-.326) Hiring suspended/debarred contractors (2 C.F.R. §§ 200.213, 200.318(h)) Insufficient documentation (2 C.F.R.§200.318(i)) Failing to include ceiling price in time & materials contracts (2 C.F.R.§200.318(j)) Not conducting a cost or price analysis above the simplified acquisition threshold (2 C.F.R.§200.323(a)) Using prohibited cost-plus-percentage-of-cost contracts (2 C.F.R.§200.323(d)) Failing to take affirmative socioeconomic steps (2 C.F.R.§200.321) Not including required contract provisions (2 C.F.R.§200.326 & App. II)

Questions?