3.8 Procurement under Awards of Federal Assistance
Procurement Standards—General Guidance
The Procurement Standards in the Uniform Guidance at 2 C.F.R. § 200.317 through 2 C.F.R. § 200.326 detail requirements and restrictions imposed on non-Federal entities (i.e., recipients and subrecipients) that use Federal assistance funds to procure property or services needed to carry out the grant-funded project.
For procurement transactions using Federal award funds, the non-Federal entity must use its own documented procurement procedures consistent with applicable State, local, and tribal laws and regulations. Procurement procedures must be formally documented by the non-Federal entity and periodically reviewed to ensure compliance with applicable regulations. A State must follow the same policies and procedures it uses for the State’s procurement for its non-Federal funds.
Non-Federal entities must maintain written standards of conduct covering conflict of interest and employee participation in selection, award and administration of contracts. Recipients or subrecipients must also ensure that contractors perform in accordance with the terms, conditions and specifications of their awards. Contracts should only be awarded to responsible contractors possessing the ability to perform successfully under the terms and conditions of proposed procurements. Records that detail the history of all procurements must be maintained and should include, but not limited to:
- Rationale for the method of procurement;
- Selection of contract type;
- Contractor selection and/or rejection process; and
- Basis for the contract prices.
Non-Federal entities are responsible, in accordance with good administrative practice and sound business judgment, for the settlement of all contractual and administrative issues arising out of the procurement.
Award recipients and subrecipients must:
- Have a documented process to check for organizational conflict of interest with potential contractors;
- Have a process in place to ensure that contracts are not awarded to contractors or individuals on the List of Parties Excluded from Federal Procurement and Non-procurement Programs; and
- Perform a System for Award Management (SAM) review of potential contractors or individuals.
Non-Federal entities’ procedures must avoid acquisition of unnecessary or duplicative items. Where appropriate, lease versus purchase analysis should be performed as well as other appropriate analysis for determining the most economical method for obtaining items or services. Recipients are encouraged to use Federal excess and surplus property when possible and to enter into inter-agency or inter-governmental agreements where appropriate to procure common or shared goods and services.
Non-Federal entities must include any applicable provisions found at 2 C.F.R. § 200 Appendix II (“Contract Provisions for Non-Federal Entity Contracts Under Federal Awards”) in all contracts made by non-Federal entities (i.e., recipients and subrecipients) under the Federal grant award.
For additional guidance please see the DOJ Guide to Procurement Procedures [PDF - 700 Kb].
Financial Management Tip
When conducting procurements using Federal award funds, a subrecipient of a State must use its own documented procurement procedures and must adhere to all applicable requirements found in 2 C.F.R. § 200.318 through 200.326 of the Procurement Standards.
As used in this section (3.8) and elsewhere throughout the Guide, the term “non-Federal entity/entities” includes for-profit recipients and for-profit subrecipients of DOJ grant or cooperative agreement funds.
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Methods of Procurement
There are several methods of procurement that may be used by recipients and subrecipients including:
- Procurement by micro-purchase;
- Procurement by small purchase procedures;
- Procurement by sealed bids;
- Procurement by competitive proposals; and
- Procurement by noncompetitive proposal.
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Recipients and subrecipients must conduct all procurement transactions in a manner providing full and open competition consistent with the Procurement Standards in the Uniform Guidance. This requirement holds whether procurement transactions are negotiated or competitively bid, and without regard to dollar value. In order to avoid unfair competitive advantage, contractors that develop or draft specifications, requirements, statement of work, and invitations for bids or requests for proposals must be excluded from competing for such procurements.
The following situations are considered to be restrictive and should not take place:
- Placing unreasonable requirements on firms in order for them to qualify to do business;
- Requiring unnecessary experience or 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 a “brand name” product instead of allowing “an equal” product to be offered; and
- Any arbitrary action in the procurement process
Written procedures for procurement transactions must ensure that all solicitations incorporate a clear and accurate description of the technical requirements of the material, product or service to be procured. Solicitations should also identify all requirements which offerors must fulfill and all other factors to be used in evaluating bids and proposals.
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Non-Federal entities may conduct noncompetitive proposals (or, “sole source” procurement), by procurement through solicitation from only one source when one or more of the following circumstances apply:
- The item or service is available only from a single source;
- The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation;
- DOJ or the pass-through entity expressly authorizes noncompetitive proposals in response to a written request from the non-Federal entity; or
- After solicitation of a number of sources, competition is determined to be inadequate.
All sole source procurements in excess of the Simplified Acquisition Threshold set in accordance with 41 U.S.C. 1908 (currently set at $150,000), must receive prior approval from the grant-making component before entering into the contract.
|1||Brief description of program and the product or service being procured, to include the expected-procurement amount.|
|2||Explanation of why it is necessary to contract non-competitively, including at least one of the four circumstances listed above. The justification may also include the following contractor qualities:
|3||Description of and the results of any market survey or research conducted to help determine whether a full and open competition consistent with applicable law could be conducted (or, if no market survey or research was conducted, explain why not).|
|4||Statement of when contractual coverage is required and, if dates are not met, what impact it will have on the program (for example, how long it would take another contractor to reach the same level of competence). Make sure to include the financial impact in dollars.|
|5||Other points to "sell the case."|
|6||Declaration that this action is in the "best interest" of the grantor agency and/or the Federal Government.|
|7||Conflict of Interest Review|
|Note: Time constraints will not be considered a factor if the award recipient has not sought competitive bids in a timely manner.|
The following “Dos and Don’t” lists are non-exhaustive and highlight a few elements from the Procurement Standards. To help ensure that recipients conduct procurement transactions in full compliance with the Procurement Standards and other applicable law, the use of these highlights are considered as a starting point only, and should not be relied upon as though they fully cover all aspects of the law, rules, policies, or procurement procedures that may apply to procurement transactions conducted using Federal award funds.
- Provide for full and open competition consistent with the Procurement Standards.
- Develop and incorporate clear and accurate descriptions for technical requirements, specifications, statements of work, or other required documents used in procurement transactions.
- Ensure any prequalified lists of persons, firms, or products used in acquiring goods and services are current and include enough qualified sources to ensure maximum open and free competition consistent with the Procurement Standards.
- Only make procurement contracts to responsible contractors that can perform successfully in accordance with contract terms and conditions.
- Maintain records sufficient to detail the history of any procurement action.
- Don’t include unreasonable (or otherwise unjustifiable) requirements that would be restrictive of competition.
- Don’t require unnecessary experience or other unnecessary criteria or elements that cannot be justified or supported with procurement procedures and the Procurement Standards.
- Don’t allow for, engage in, or facilitate noncompetitive pricing between firms or affiliated companies.
- Don’t forget to include all applicable contract provisions described in Appendix II to Part 200 in any procurement contracts.
- Don’t require unreasonable time frames or performance.
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