1. Procurement Policies under the Uniform Guidance
U.S. Department of Education

2. Purpose and Use of this Presentation
The Department of Education is providing this presentation to help its grantees understand the contents of the Uniform Guidance and should be viewed after or alongside of the regulations. It is not a substitute for reading the regulations. To get the most out of this presentation, view this as a notes page. The notes section of each slide provides information to supplement the points on the slide. To change to notes page: Go to View and click on Notes Page.
The Uniform Guidance, which is title 2 of the Code of Federal Regulations (CFR) Part 200, has also been called the omni-circular and the supercircular. The full name is the Uniform Administrative Requirements, Cost Principles, and Audit Requirements. We refer to it as either the Uniform Guidance or 2 CFR Part 200, throughout this presentation.
The Uniform Guidance is found at:
Additional resources for grantees are found at:

3. Learning Outcomes
Understand the key terms regarding the procurement standards
Locate the procurement standards in 2 CFR Part 200
Understand basic concepts and how the UG impacts practices
Apply this knowledge administering your grant or subgrant
Ensure your procurement procedures comply with the UG
Document all project related activities—including procurement—to support decisions and allocation of funds
Be able to locate resources, tools, and contacts

4. Uniform Guidance
Title 2 of the Code of Federal Regulations, Part 200 (2 CFR Part 200)
Adopted by the Department of Education in 2 CFR Part 3474
Throughout this presentation, this symbol indicates a new or significantly changed item.
2 CFR Part 200 was adopted by Department of Education (the Department) on December 19, 2014 at 2 CFR Part 3474, as its regulations for administering all grants, with one exception and one clarification. The clarification is that we will continue to use high risk designations when awarding grants. The exception concerns the process the Department will follow in granting exceptions from the requirements of the Uniform Guidance.
Exceptions is an important point because it explains why there seem to be so many differences in implementation when this guidance was supposed to bring consistency across the Federal government. The Department has only one exception; while some Departments have a large number of exceptions.

5. Authorities to consider when using 2 CFR Part 200
“This guidance does not change or modify any existing statute or guidance otherwise based on any existing statute.”
The quote comes from the UG summary statement on the Federal Register site
The Uniform Guidance does not supersede:
Program laws and regulations.
Other Federal statutes (ADA, for example)
It does replace EDGAR parts 74 and 80 and six OMB Circulars. EDGAR part 77 has been updated to reflect the new definitions.
See the Webcast for Grantees (May 27, 2015) at for more information.

6. When does 2 CFR Part 200 start?
Uniform Guidance (2 CFR Part 200) applies to:
New and Continuation grants awarded on or after December 26, 2014
Former regulations (EDGAR Part 74 or 80 and OMB circulars) apply to:
Grants awarded prior to December 26, 2014
See the Department’s FAQs for more information on implementation dates.

7. When does 2 CFR Part 200 start?
Award Start*
Uniform Guidance Start
Optional Procurement Grace Period end date
1/1/2015
12/31/2015
7/1/2015 (SEA)
7/1/2015
N/A
8/15/2015 (LEA)
8/15/2015
8/14/2016
10/1/2014
10/1/2015 (NCC)
9/30/2016
10/1/2015
10/1/2015 (New)
* Award date or start of FY for formula grants; Assumes either continuation or new award will be made at the end of the one year period.
Each agency has established its own timelines for implementation. At ED, we require that all new grants and continuation grants awarded after 12/26/2014, be subject to the new regulations. However, nothing prohibits a grantee from implementing the Uniform Guidance earlier (except the audits, Subpart F), but the grantee needs to communicate to you if they want to implement these regulations early. For some discretionary grants that were funded up-front, it is possible that we might see a few instances of administrative actions or supplements being governed by the old rules.
Grace period: A grace period can be given to entities required to change procurement policies. This is not required.
States continue to follow state law and procedures rather than the UG. Therefore, states are not being required to change their procurement standards and procedures and have no option of a grace period.
FROM COFAR Q and A:
Will the Federal government provide a grace period after the effective date for non-Federal entities to comply with the procurement standards in the Uniform Guidance?
Yes, for one full fiscal year after the effective date of the Uniform Guidance. In general non-Federal entities must comply with the terms and conditions of their Federal award, which will specify whether the Uniform Guidance applies. However, in light of the new procurement standards, for procurement policies and procedures, for the non-Federal entity’s first full fiscal year that begins on or after December 26, 2014, the non-Federal entity must document whether it is in compliance with the old or new standard, and must meet the documented standard. For example, the first full fiscal year for a non-Federal entity with a June 30th year end would be the year ending June 30, The Single Audit Compliance Supplement will instruct auditors to review procurement policies and procedures based on the documented standard. For future fiscal years, all non-Federal entities will be required to comply fully with the uniform guidance.

8. Relationships and Key Terms
The requirements we are discussing here today are only for subrecipients, what we typically call subgrants, not for contractors. We will spend a short amount of time on this, but grantees, subgrantees and their respective staff that make the decisions concerning subgrants and procurements, should know the difference.

9. Subrecipient or Contractor?
The relationship, rather than the document title, is the basis for determining which requirements are applicable.
Subrecipient means a non-Federal entity that receives a subaward from a pass-through entity to carry out part of a Federal program (§200.93).
Contractor means an entity that receives a contract as defined in Contract (§200.23).
§ explains the roles of subrecipients and contractors.
Subawarding and contracting are two different things with different regulations. Know the difference.
A key point in differentiating between a subaward and a contract is who has day to day direct oversight of the work – grantees have oversight of subgrantees’ work. Subawarding is also not to be confused with group/partner grants or standard contractual arrangements and subgranting is only allowed if authorized by statute or announced in the Federal Register.
Managing subawards and risks related to subawards are be addressed in the materials on risk and subaward management.

10. §200.88 Simplified acquisition threshold
The dollar amount below which a non-Federal entity may purchase property or services using small purchase methods
Set by the Federal Acquisition Regulation (FAR) (§200.88)
Equals $150,000--adjusted periodically for inflation
§ Simplified acquisition threshold.
Emphasis on: Non-Federal entities to adopt small purchase procedures in order to expedite the purchase of items costing less than the simplified acquisition threshold
Simplified acquisition threshold means the dollar amount below which a non-Federal entity may purchase property or services using small purchase methods. Non-Federal entities adopt small purchase procedures in order to expedite the purchase of items costing less than the simplified acquisition threshold. The simplified acquisition threshold is set by the Federal Acquisition Regulation at 48 CFR Subpart 2.1 (Definitions) and in accordance with 41 U.S.C As of the publication of this part, the simplified acquisition threshold is $150,000, but this threshold is periodically adjusted for inflation. (Also see definition of § Micro-purchase.)

11. Locating Procurement Standards§

12. §200.317 Procurement by states
A State must use the same procedures it uses to procure property and services under a Federal award as it uses for all other procurements using non-federal funds.
States will comply with § Procurement of recovered materials.
All other grantees and subgrantees must follow sections
through
full text:
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.

13. §200.318 General procurement standards
Non-Federal entities must:
Use own documented procurement procedures,
Maintain oversight to ensure contractor compliance, and
Maintain written standards of conduct covering, conflicts of interest—real and or perceived—for staff engaged in the selection, awarding or the administration of a contract.
Documenting procedures must conform to state law and meet minimum requirements in Federal laws, regulations and these procurement requirements.

14. Conflicts of Interest – §200.318(c)(1)
A conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of those parties, has a financial or other interest in or receives a tangible personal benefit from a firm considered for a contract.
Language from 318(c)(1): conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. The officers, employees, and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, non-Federal entities may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity.

15. Conflicts of Interest (ctd)
Non-Federal entities may set standards for situations in which the financial interest is not considered substantial or the gift is an unsolicited item of nominal value.
The standards of conduct must provide for disciplinary actions to be applied for violations of such standards.
Organizational conflicts of interests could be an issue that bares watching by ED staff.
The presentation does address organizational conflicts in more detail. The key is that developing procurement procedures with safeguards to avoid real or perceived conflicts of interest are very important. So too is to outline dollar amounts or the types of gifts that would fall in to category of a nominal value.
And while no one wants to have a problem, it is important to have established written policies on employee standards of conduct and the types of disciplinary actions that would be imposed on an employee for violating these standards. Consistent, written procedures are a strong piece to the necessary internal controls to safeguard not only Federal funds but institutional integrity.

16. Organizational Conflicts of Interest
Conflicts arise when a non-Federal entity is unable or appears to be unable to be impartial in conducting a procurement action involving a related organization.
Written standards of conduct must address organizational conflicts of interest.
Does not apply when related organization is a local government, state or Indian tribe.
Key words to use when discussing include parent, affiliate, or subsidiary organization. Contact your program officer if you have any concerns about a real or perceived organizational conflict of interest to resolve as early as possible before Federal funds have been used.

17. Foster Economy and Efficiency
Avoid purchasing unnecessary or duplicative items;
Consider consolidating or breaking out procurements, and leasing vs purchasing alternatives;
Consider entering into intergovernmental agreements or inter-entity agreements for the procurement of common or shared goods and services; and
Use Federal surplus equipment and property.
2 CFR Part goes on to state in (d) The non-Federal entity's procedures must avoid acquisition of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase. Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach.
(e) To foster greater economy and efficiency, and in accordance with efforts to promote cost-effective use of shared services across the Federal Government, the non-Federal entity is encouraged to enter into state and local intergovernmental agreements or inter-entity agreements where appropriate for procurement or use of common or shared goods and services.

18. Responsible Contractors §200.318(h)
The non-Federal entity must award contracts only to responsible contractors who are able to perform successfully under the terms and conditions the contract.
Consider:
Contractor integrity, compliance with public policy,
Record of past performance, financial & tech resources, and
Possible exclusions (See § —Suspension and
Debarment).
The non-Federal entity must award contracts only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement. Consideration will be given to such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources. See also § Suspension and debarment.

19. Recordkeeping - § (i)
The non-Federal entity must maintain records sufficient to detail the history of procurement.
Records include, but not 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.
Records are a road map. They should answer questions and not raise questions in the minds of whoever is reviewing the records. The larger the dollar amount then the greater the level of detail—Although every dollar and procurement decision should be documented and accounted for.
Please note that this slide does not include every paragraph in the section. For a complete and thorough understanding of 2 CFR, grantees and other interested parties are strongly encouraged to review all the requirements listed in the regulations.

20. § Competition
All procurement transactions must be conducted in a manner providing full and open competition.
Real or perceived unfair advantages must be avoided.
New change to address real or perceived unfair advantage impacts certain contractors.
An important example of this is in (a) which prohibits contractors that develop or draft specifications, requirements, statements of work, or invitations of bids or proposals from being considered for competing for such procurements.
This is a point that has raised a lot of questions. And with regards to bringing in partner organizations to support a grant or hiring individuals to write a grant application and who in turn would be likely candidates to conduct the project evaluation, it has been a concern within ED’s grantee community.
For discretionary grantees, there is an exception that would allow for these pre-established relationships to continue. Please review

21. Organizational Conflicts of Interest
Section (a) introduction provides that 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 (this insider information is the very essence of organizational conflicts of interests).
This limitation is the very definition of an organizational conflict of interests.

22. Examples of Restricting Competition
Placing unreasonable requirements on firms to qualify,
Unnecessary experience and excessive bonding,
Noncompetitive pricing practices between firms, and
Specifying only a “brand name” product instead of allowing an equal product to be offered.
Other points include unnecessary experience and excessive bonding

23. Allowable use of Brand Names
Provide a clear and accurate description of the technical requirements to be procured.
The description must not unduly restrict competition.
When impractical to otherwise describe the technical requirements, a “brand name or equivalent” description may be used as a means to define the procurement.
Specific features of the named brand that must be achieved are to be clearly stated.
Non-Federal entities must have written procedures for all procurement transactions.

24. §200.320 Methods of procurement to follow
The non-Federal entity must use one of the following:
Micro-purchases,
Small purchase procedures,
Sealed bids,
Competitive proposals, or
Non-competitive proposals (severely limited).

25. § Micro-purchase
Micro-purchase means a purchase of supplies or services using simplified acquisition procedures, the aggregate amount of which does not exceed the micro-purchase threshold
As of October 1, 2015 the micro-purchase threshold will increase from $3,000 to $3,500
Per Section (a), micro-purchases:
Must be distributed equitably among qualified suppliers.
May be awarded without soliciting quotations if
the price is considered to be reasonable.
§ Micro-purchase.
Why use this: expedite the completion of the lowest-dollar small purchase transactions and minimize the associated admin burden.
Threshold: $3,000. Please note that the micro-purchase threshold will increase on October 1, 2015 to $3,500 and is subject to adjustment every five years in the Federal Acquisition Regulations.
Grantees and subgrantees that are not States should amend their thresholds o comply with the Uniform Guidance.
Full definition below:
Micro-purchase means a purchase of supplies or services using simplified acquisition procedures, the aggregate amount of which does not exceed the micro-purchase threshold. Micro-purchase procedures comprise a subset of a non-Federal entity's small purchase procedures. The non-Federal entity uses such procedures in order to expedite the completion of its lowest-dollar small purchase transactions and minimize the associated administrative burden and cost. The micro-purchase threshold is set by the Federal Acquisition Regulation at 48 CFR Subpart 2.1 (Definitions). It is $3,000 except as otherwise discussed in Subpart 2.1 of that regulation, but this threshold is periodically adjusted for inflation.

26. Small Purchase Procedures
Simple, informal methods for securing needed material that do not cost more than Simplified Acquisition Threshold ($150,000).
Price or rate quotations, when used, must be obtained from an adequate number of qualified sources.
The Uniform Guidance requires very informal procedures. These are minimum standards. Other, more onerous, standards may also apply, from within the entity for example.
“Adequate number” depends upon the circumstances of each procurement. There may be some cases where only two businesses respond to the request for proposals. If there is a scarcity of companies in the non-Federal entity’s area that have the qualifications needed to provide a service, two bidders might suffice. The Uniform Guidance does not specify the number, neither does ED. However, some agencies have identified 3 as the number.

27. Sealed Bids (Formal Advertising)
Bids are publicly solicited and a firm fixed price contract (lump sum or unit price) is awarded to the responsible bidder whose bid:
conforms with all the material terms and conditions and
is the lowest in price.
Preferred method for procuring construction
The sealed bid method is the preferred method for procuring construction, if the conditions in paragraph (c)(1) of this section apply. Most ED grants do not have construction as an allowable expenditure and thus ED does not anticipate to receive many questions arising from the grantee community concerning the issue of sealed bids. If a grantee or subgrantee asks ED if it has to use sealed bids in a case that does not involve construction, the program officer should inform the questioner that the regulations don’t require that but if its procedures require that use, that doesn’t violate our regulations, but we don’t recommend sealed bids for any purpose other than construction contracts.

28. Competitive Proposals
Must use adequate number of sources, and either a fixed price or cost-reimbursement type contract is awarded.
Generally used when conditions are not appropriate for the use of sealed bids.
(1) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Any response to publicized requests for proposals must be considered to the maximum extent practical;
(2) Proposals must be solicited from an adequate number of qualified sources;
(3) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and for selecting recipients;
(4) Contracts must be awarded to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered; and (Note: This gives flexibility to not select lowest bidder if other factors such as responsiveness to the RFP dictate a different offeror would give the best value to the entity.)
(5) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby competitors' qualifications are evaluated and the most qualified competitor is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms are a potential source to perform the proposed effort.

29. Noncompetitive Proposals (Sole Source)
Solicitation of a proposal from only one source and may be used only when one or more of the following circumstances apply:
The item is available only from a single source;
An emergency or other exigency for the requirement will not permit a delay resulting from competitive solicitation;
An emergency is typically a natural disaster, but can also be something like a cyber attack that shuts down a critical system.
The grantee or subgrantee must be able to document the basis for the emergency.

30. Noncompetitive Proposals (Sole Source)
The Federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request from the non-Federal entity; and/or
After solicitation of a number of sources, competition is determined inadequate.
The key behind being able to say that a competition has been inadequate in terms of generating quality competitive bids is the good faith effort on the part of the grantee or subgrantee. As with any decision pertaining to the administration of the grant or subgrant, document the official records to support the justification for awarding a sole source contract.

31. §200.323 Contract cost and price
If procurement exceeds the Simplified Acquisition Threshold, the non-Federal entity must perform a cost or price analysis.
The method and degree of analysis depends on the facts surrounding the particular procurement.
The non-Federal entity must make independent estimate before receiving of any bids or proposals.

32. Negotiating Profit
If there is no price competition or the procurement exceeds the simplified acquisition threshold, non- Federal entity must negotiate profit as a separate element of the price.
Fair and reasonable profit is an understood and allowable result of the successful completion of a contract.
CLARIFY BETWEEN PROFIT AND OVERHEAD (AS OPPOSED TO INDIRECT COSTS)
Procurement is not the same as a subaward; therefore, no indirect costs can be charged.
Grantees and subgrantees must conduct a cost analysis when the procurement exceeds the Simplified Acquisition Threshold.
Note: These are factors to be considered when negotiating profit into a government contract.
The complexity of the work to be performed
The risk borne by the contractor
The contractor's investment
The amount of subcontracting
Industry profit rates for similar work based on geography
The record of past performance

33. Technical specifications review§200.324
Grantees and subgrantees can request review by pass-through entity and Federal agency.
If there is an appearance of irregularitys, we can still look at it without a request.
All the standards for review of procurement procedures are found in § (Be aware!).

34. § Contract Provisions
The non-Federal entity's contracts must contain the applicable provisions described in Appendix II to Part 200—Contract Provisions for non-Federal Entity Contracts Under Federal Awards.
Federal agency or non-Federal entity may require additional provisions.
See Appendix II to Part 200—Contract Provisions for Non-Federal Entity Contracts Under Federal Awards