Summary: To deliver on the promise of a 21st-Century government that is more efficient, effective and transparent, the Office of Management and Budget.

Summary: To deliver on the promise of a 21st-Century government that is more efficient, effective and transparent, the Office of Management and Budget (OMB) is streamlining the Federal government’s guidance on Administrative Requirements, Cost Principles, and Audit Requirements for Federal awards. These modifications are a key component of a larger Federal effort to more effectively focus Federal resources on improving performance and outcomes while ensuring the financial integrity of taxpayer dollars in partnership with non-Federal stakeholders. This guidance provides a governmentwide framework for grants management which will be complemented by additional efforts to strengthen program outcomes through innovative and effective use of grantmaking models, performance metrics, and evaluation. This reform of OMB guidance will reduce administrative burden for non-Federal entities receiving Federal awards while reducing the risk of waste, fraud and abuse.

Consolidates and Supersedes:
A-21 Cost Principles for Educational Institutions A-50 Audit Followup A-87 Cost Principles for State, Local and Indian Tribal Governments A-89 Catalog of Federal Domestic Assistance A-102 Grants and Cooperative Agreements With State and Local Governments A-110 Uniform Administrative Requirement for Grants and Other Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations A-122 Cost Principles for Non-Profit Organizations A-133 Audits of States, Local Governments and Non-Profit Organizations

Procurement Standards
§ § and Appendix II

§200.317 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 § Procurement of recovered materials and ensure that every purchase order or other contract includes any clauses required by section § Contract provisions. All other non-Federal entities, including subrecipients of a state, will follow §§ General procurement standards through Contract provisions. (Note: There is a question whether this blanket provision also applies to state-supported colleges and universities. For now, must assume “No.”)

§200.318 - General Procurement Standards
Purchase must be necessary (FAQ 320-1) NFE must use its own documented procedures (FAQ 320-1) Must reflect applicable State and local laws and regulations But!. . . must conform to applicable Federal law and the 2 CFR 200 Procurement Standards NFE must maintain oversight to ensure suppliers perform (terms, conditions, specs)

NFE must Maintain written standards of conduct and provide for disciplinary action Conflict of interest (FAQ 320-1), and Employee performance in selection, award, and administration of procurements But NFE may set standards for insubstantial financial interest and nominal gifts Maintain written standards of conduct covering organizational conflicts of interest (parent, affiliate, subsidiary)

NFE must have procedures that avoid unnecessary or duplicative procurements Consider consolidating or breaking out procurements to get better price, Strategic sourcing or bulk purchase (FAQ & 320-4), and Do lease / purchase analyses, or Do any other analyses to get most economical purchase NFE should consider state and local intergovernmental agreements or inter-entity agreements where appropriate for common or shared goods / services

NFE should use Federal excess and surplus property in lieu of new when feasible and cheaper NFE should use value engineering clauses for construction projects

NFE must award only to able suppliers (who demonstrate all of the following) Integrity Compliance with public policy Record of past performance Financial resources Technical resources

NFE must maintain good records that detail procurement’s history (all of the following) (FAQ 320-1) Rationale for procurement method Selection of contract type Supplier selection or rejection Basis for price

NFE should avoid Time-and-Material contracts, but may use them only after determining: (1) no other contract type is suitable, (2) there is a ceiling price above which supplier has the risk, and (3) NFE asserts strong oversight that supplier uses efficient methods and cost controls

NFE alone (i.e., not the awarding agency) is responsible for settlement of all contractual and administrative issues (awarding agency is responsible only if matter is of Federal concern; refer law violations to appropriate local, state, or Federal authority having jurisdiction) (any of the following) Source evaluation Protests Disputes Claims

§ Competition Full and open (to the extent required by each method) (FAQ ) Objective > supplier performance Eliminate unfair supplier advantage Suppliers that develop specs cannot participate in the solicitation

§ Competition Examples of situations that restrict competition (any of the following) Unreasonable requirements Unnecessary supplier experience Excessive bonding Noncompetitive pricing practices between firms or affiliated companies Noncompetitive contracts to consultants on retainer Organizational conflicts of interest Specifying “brand name” without allowing “or equal” Any arbitrary action in the procurement process

§ Competition No geographic preferences except where Federal law allows or mandates it But OK for A&E services as long as there is an appropriate number of qualified firms, given the nature and size of the project

§ Competition NFE must have written procedures. Solicitations must: Incorporate clear and accurate description of technical requirements But no features that unduly restrict competition May include qualitative statements When necessary, include minimum essential characteristics and standards When necessary, OK to use “brand name or equivalent” But the specific features of the named brand must be clearly stated Identify ALL requirements that respondents must fulfill and all other factors that will be used in evaluation

§ Competition NFE must ensure that all lists of prequalified sources are current and include enough of them to ensure maximum open and free competition. Potential sources must not be prevented from qualifying during the solicitation period.

§200.320 – Methods of Procurement to be Followed
Procurement cards are OK for any method (FAQ 320-5) The methods apply only to direct costs, not indirect (FAQ )

Micro-purchases (subset of small purchase procedures ) Defined at § // Set by FAR 48 CFR Subpart 2.1 Threshold currently $3,000 ($2,000 for construction subject to Davis-Bacon Act); periodically adjusted for inflation Expedite lowest-dollar small purchases; minimize associated administrative burden and cost Do not require competitive quotations if NFE considers price reasonable NFE must distribute equitably among qualified suppliers to the extent practicable No cost or price analysis (FAQ 320-1)

Small purchase procedures Aggregate dollar amount less than Simplified Acquisition Threshold Defined at § // Set by FAR 48 CFR Subpart 2.1 and ICW 41 U.S.C. 1908 Simplified Acquisition Threshold is currently $150,000; periodically adjusted for inflation Relatively simple and informal Quotations must be obtained from an adequate number of qualified sources “Adequate” is determined by the NFE (FAQ 320-1) Method (written, oral, price list, on line search) is determined by the NFE (FAQ 320-1) No cost or price analysis (FAQ 320-1)

Sealed bids (above the Simplified Acquisition Threshold) Publicly solicited Firm fixed price (lump sum or unit) Awarded to lowest conforming bid / responsible bidder Preferred for construction

Sealed bids (above the Simplified Acquisition Threshold) Conditions under which sealed bids work well (all of the following) Complete, adequate, realistic specifications Two or more willing and responsible bidders The procurement lends itself to a firm fixed price Selection can be made principally in price

Sealed bids (above the Simplified Acquisition Threshold) If used, here are the requirements (all of the following) Solicitations must be publicly advertised An adequate number of known suppliers must be available Sufficient response time must be allowed Specifications and attachments must adequately define the procurement Bids must be publicly opened at the time and place prescribed Firm fixed price contract is awarded to the lowest responsible bidder Where specified in solicitation, factors such as discounts, transportation, and life cycle costs must be considered in determining lowest bid Payment discounts are used to determine low bid only when experience demonstrates that such discounts are routinely taken Any or all bids may be rejected if there is a sound documented reason

Competitive Proposals (above the Simplified Acquisition Threshold) Normally, more than one source responding Normally, fixed price or cost-reimbursement type contract is awarded Used when conditions are not appropriate for sealed bids

Competitive Proposals (above the Simplified Acquisition Threshold) If used, here are the requirements (all of the following) RFPs must be publicized RFPs must identify all evaluation factors and their relative importance Any response must be considered to the maximum extent practical Proposals must be solicited from an adequate number of qualified sources There must be a written method for conducting technical evaluations of responses and for selecting recipients Contracts must be awarded to the responsible source whose proposal is most advantageous to the program, with price and other factors considered When soliciting qualifications-based A&E professional services subject to negotiation, cannot solicit other types of services even though a firm may be able to provide them

Noncompetitive Proposals (any dollar amount, but – practically speaking - above the micro-purchase threshold [FAQ 320-2]) Solicited only from one source May only be used under any of the following conditions The item is available only from a single source The public exigency or emergency will not permit the time required for competition The awarding agency or pass-through entity expressly authorizes it in response to a written request from the non-Federal entity After solicitation of a number of sources, competition is determined inadequate Required for scientific reasons (FAQ 320-2)

§ – Contracting with Small and Minority Businesses, Women’s Business Enterprises, and Labor Surplus Area Firms Must take all necessary affirmative steps to assure such entities are used when possible Affirmative steps include (all of the following) Placing such entities on solicitation lists Assuring that such entities are solicited whenever they are potential sources Dividing total requirement, when economically feasible, in to smaller tasks or quantities to permit maximum participation by such entities Establishing delivery schedules, where requirements permit, which encourage participation by such entities Using such organizations as Small Business Administration and the Minority Business Development Agency Requiring prime contractors to take the same above affirmative steps with respect to any subcontractors

§200.322 – Procurement of Recovered Materials
Section 6002 of the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act Procuring only items designated in guidelines of the EPA at 40 CFR Part 247 (all of the following) 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 by the preceding fiscal year exceeded $10,000 Procuring solid waste management services in a manner that maximizes energy and resource recovery Establishing an affirmative procurement program for procurement of recovered materials identified in the EPA guidelines

§200.323 – Contract Cost and Price
Must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold Method and degree depends on facts surrounding the procurement As a starting point, must make independent estimates before receiving bids or proposals

Must negotiate profit as a separate element of price for each contract in which there is no price competition and in all cases where cost analysis is performed Must consider (all of the following) Complexity of the work to be performed Risk borne by the contractor Contractor’s investment Amount of subcontracting Quality of record of past performance Industry profit rates in the geographical area for similar

Costs or prices based on estimated costs are allowable only to the extent that costs incurred or cost estimated included in negotiated prices would be allowable under Cost Principles. NFE may reference its own cost principles that comply with Federal cost principles. Must not use cost plus percentage of cost and percentage of construction cost methods

§200.324 – Federal Awarding Agency or Pass-Through Entity Review
If Federal awarding agency or pass-through entity requests, NFE must make available technical specs on proposed procurements Should take place before the specs are incorporated into a solicitation But may take place after the specs are incorporated; review s/b limited to the technical specs

If Federal awarding agency or pass-through entity requests, NFE must make available solicitations and cost estimates under the following conditions NFE’s procurement standards don’t comply with A-81 The procurement may exceed the Simplified Acquisition Threshold and any of the following conditions apply Procurement is to be awarded without competition Only one response / offer is received Specifies a “brand name” Procurement is sealed bid and is to be awarded to other than low bid Proposed modification changes the scope or increases the amount above the Simplified Acquisition Threshold

If Federal awarding agency or pass-through entity requests, NFE must make available solicitations and cost estimates under the following conditions (continued) If NFE’s procurement standards do comply with A-81, then it is exempt from § (b) NFE may request review for compliance certification by the Federal awarding agency or pass-through entity. Generally, these reviews must occur where There is high-dollar funding and Third party contracts are awarded regularly NFE may self-certify But Federal awarding agency still has right to survey system and may rely on NFE’s written assurances of compliance Assurances must cite specific policies, procedures, regulations, or standards Still, NFE must make system available for review

§200.325 – Bonding Requirements
For construction or facility improvement contracts or subcontracts exceeding the Simplified Acquisition Threshold Federal awarding agency or pass-through entity may accept NFE’s bonding policy and requirements if either determines that Federal interests are protected by such policy If no determination has been made Each bidder must provide a bid guarantee of 5% of the bid price. . . assuring that the bidder will, upon bid acceptance, execute such contractual documents as may be required within the specified time frame (any of the following) Bid bond, Certified check, or Other negotiable instrument Contractor must submit a performance bond of 100% of the contract price, to secure fulfillment of all contractor obligations under the contract Contractor must submit a payment bond of 100% of the contract price, to assure payment of all persons supplying labor and material under the contract

§200.326 – Contract Provisions (Appendix II)
Remedies for Violation or Breach of Contract. For contracts exceeding Simplified Acquisition Threshold must address administrative, contractual, or legal remedies in instances where contractors violate or breach contract terms, and provide for such sanctions and penalties as appropriate

Termination for Cause or Convenience. All contracts exceeding $10,000 must address termination for cause and for convenience by the NFE, including the manner by which it will be effected and the basis for settlement

Equal Employment Opportunity. Contracts that meet the definition of “federally assisted construction contract” (41 CFR Part ) must include the equal opportunity clause per 41 CFR Part (b), in accordance with Executive Order 11246, “Equal Employment Opportunity” (30 FR 12319, , 3 CFR Part, Comp., p. 339) as amended by Executive Order 11375, “Amending Executive Order Relating to Equal Employment Opportunity,” and implementing regulations at 41 CFR Part 60, “Office of Federal Contract Compliance Programs, Equal Employment Opportunity, Department of Labor.”

Davis-Bacon Act // Prevailing Wage. When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by NFEs must include a provision for compliance with the Davis-Bacon Act (40 U.S.C , and ) as supplemented by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). Contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. Contractors must be required to pay wages not less than once a week. NFE must place a copy of the current prevailing wage determination issued by the Department of Labor in each solicitation. The decision to award a contract or subcontract must be conditioned upon the acceptance of the wage determination. NFE must report all suspected or reported violation to the Federal awarding agency. The contracts must also include a provision for compliance with the Copeland “Anti-Kickback” Act (40 U.S.C. 3145), as supplemented by Department of Labor Regulations (29 CFR Part 3, “Contractors and Subcontractors on Public Building or Public Work Finance in Whole or in Part by Loans or Grants from the United States”). The act provides that each contractor or subrecipient must be prohibited from inducing, by any means, any person employed in the construction, completion, or repair of public work, to give up any part of the compensation to which he or she is otherwise entitled. NFE must report all suspected or reported violations to the Federal awarding agency.

Work Hours and Safety Standards. Contracts in excess of $100,000 that involve the employment of mechanics or laborers must include a provision for compliance with 40 U.S.C and 3704, as supplemented by Department of Labor regulations (29 CFR Part 5). Each contractor must be required to compute the wages of every mechanic and laborer on the basis of a standard work wee of 40 hours. Work in excess of the standard work week is permissible provided that the worker is compensated at a rate not less than one and a half times the basic rate of pay for all hours worked in excess of 40 hours in the work week. The requirements of 40 U.S.C are applicable to construction work and provide that no laborer must be required to work in surroundings or under working conditions which are unsanitary, hazardous, or dangerous. These requirements do not apply to the purchases of supplies or materials or articles ordinarily available on the open market, or contracts for transportation or transmission of intelligence.

Rights to Inventions. If the Federal award meets the definition of “funding agreement” under 37 CFR §401.2(a) and the recipient or subrecipient wishes to enter into a contract with a small business firm or nonprofit organization regarding the substitution of parties, assignment or performance of experimental, development, or research work under that “funding agreement,” the recipient or subrecipient must comply with the requirements of 37 CFR Part 401, “Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under Government Grants, Contracts and Cooperative Agreements,” and any implementing regulations issued by the awarding agency.

Clean Air Act // Federal Water Pollution Control Act. Contracts and subgrants of amounts in excess of $150,000 must contain a provision that requires the non-Federal award (NFE?) to agree to comply with all applicable standards, orders or regulations issued pursuant to the Clean Air Act (42 U.S.C q) and the Federal Water Pollution Control Act as amended (33 U.S.C ). Violations must be reported to the Federal awarding agency and the Regional Office of the EPA.

Energy Efficiency / Conservation. Mandatory standards and policies relating to energy efficiency which are contained in the state energy conservation plan issued in compliance with the Energy Policy and Conservation Act (42 U.S.C ).

Debarment / Suspension. A contract award (see 2 CFR ) must not be made to parties listed on the governmentwide Excluded Parties List System in the System for Award Management (SAM), in accordance with OMB guidelines at 2 CFR 180 that implement Executive Orders (3 CFR Part 1986 Comp., p. 189) and (3 CFR Part Comp., p. 235), “Debarment and Suspension.” SAM contains the names of parties debarred, suspended, or otherwise excluded by agencies, as well as partied declared ineligible under statutory or regulatory authority other than Executive Order

Anti-Lobbying. Contractors that apply or bid for an award of $100,000 or more must file the required certification. Each tier certifies to the tier above that it will not and has not used Federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of an agency, a member of Congress, officer or employee of Congress, or an employee of a member of Congress in connection with obtaining any Federal contract, grant or any other award covered by 31 U.S.C Each tier must also disclose any lobbying with non-Federal funds that takes place in connection with obtaining any Federal award. Such disclosures are forwarded from tier to tier up to the non-Federal award.

Procurement of Recovered Materials. See §

Summary: To deliver on the promise of a 21st-Century government that is more efficient, effective and transparent, the Office of Management and Budget.

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Summary: To deliver on the promise of a 21st-Century government that is more efficient, effective and transparent, the Office of Management and Budget.

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