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By Jack Murray, CPA, Nonprofit Lead Partner

If you receive federal grant funding, you have no doubt heard of the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, also known as Uniform Guidance.  One of the most profound changes in this revision relates to procurement.

Prior to Uniform Guidance, organizations followed cost principles in different OMB Circulars, depending on the type of entity you were.  Uniform Guidance applies one set of cost principles to all organizations and draws heavily from Circular A-102, which applied to state and local governments and tribal governments.  All organizations must review and implement the Uniform Guidance, as well as each federal agency’s published regulations that impact their award recipients.

Since the effective date of Uniform Guidance on December 26, 2014, there have been extensions of time for the implementation of the new procurement standards.  Currently the grace period expires for entities fiscal year beginning on or after three years from the effective date of Uniform Guidance.  Each organization must document whether it is in compliance with the new standard and meet the documentation requirements.  The grace period extends through December 25, 2017, so implementation of the procurement standards must be documented for fiscal years beginning on or after that date. Your Single Audit for years ending on December 31, 2018 will include testing that your policies were in compliance with Uniform Guidance during that year.  Accordingly, you must implement, document and adhere to these new standards beginning on January 1, 2018.

The general procurement standards are:

  • Every recipient of federal awards must have documented procurement procedures that follow Uniform Guidance, federal law, awarding agency regulations and any state regulations.
  • Procedures are designed to mitigate the risk of waste, fraud and abuse. The new standards encourage organizations to use shared services or inter-entity agreements to improve efficiency and cost-savings.
  • Requires written conflict of interest policies.
  • The organization must document the procurement procedures, including the type of procurement, contract type and basis for the selection of the contractor.
  • Organizations must establish and maintain an appropriate level of oversight to ensure the selected contractors perform in accordance with the contract terms.

As you can probably discern, documentation is the focus of the new standards, as well as adherence to your documented policies and procedures.  Your written policy should detail, among other things:

  • Specific processes and thresholds for each of the five procurement methods.
  • How conflicts of interest among employees involved in the procurement function will be communicated and resolved.
  • How conflicts of interest among related parties, affiliates and subsidiaries will be governed.

Because you must update your policies over procurement related to federal awards, now is a good time to review all procurement policies to ensure you have efficient processes for all purchasing activities that are well documented and adhered to.

One other area that is not new, but more clearly defined, is suspension and debarment.  Your policies must include provisions for searching the System for Award Management (formerly the Excluded Parties List System) for vendors that have been suspended or debarred from performing federally funded work.  If you do engage a prohibited vendor, the federal awarding agency could refuse to fund the expenditure or request a refund of previously awarded funds.

As I have previously mentioned, documentation is one of the more important requirements under the new guidance.  Maintaining records of bids and proposals solicited, selection criteria and decisions made is of vital importance in addition to ensuring your policies are updated and in compliance with the new guidance as well as any specific requirements imposed by your specific federal awarding agencies.

If you have any questions and need assistance, do not hesitate to contact HoganTaylor.

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