This presentation was delivered at NADO's 2018 Annual Training Conference, held in Charlotte, NC on October 13-16. For more information, visit: https://www.nado.org/events/2018-annual-training-conference/

1. Purchasing with Federal Grant
Funds—The Future is Now
NADO Annual Training Conference
October 15, 2018
Presented by Bob Lloyd
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2. Procurement Standards
• 2 CFR 200.317-326
• 2 CFR 200, Appendix II
• “Skeletal” features
• OMB’s influences
--- OMB Circular A-102, Section ___.36
--- OMB Circular A-110, Sections ___.40-48
--- Federal Acquisition Regulation (FAR) (48 CFR)
• BUT NOTE: The FAR does not apply to recipient
and subrecipient procurements
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3. Key Elements
• Policy for states
--- Broad reliance on ABA Model Procurement Code for State
and Local Governments
• Policy for others
--- OMB deferral decision (Revision to 2 CFR 200 on 9/10/15
and COFAR FAQ’s)
--- Congressional action on thresholds
--- OMB Memorandum 18-18 (June 20, 2018)
• Nature of a contract under a grant
--- “Case by case determination”
--- A “procurement relationship”
--- Joining “a buyer and a seller”
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4. Insert Federal Award Relationships
Chart
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5. Recipient and Subrecipient
Responsibility
• Reliance on its own organizational procedures
• Privity of agreement
• “Sole authority”
--- Pre-award
----- Irregularities
----- Bid protests
--- Post-award
----- Interpretation
----- Claims
• Grantor agency involvement
--- 2 CFR 200.324
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6. Code of Conduct
• Conflict of interest (2 CFR 200.318(c))
--- Familial
--- Financial
--- Organizational
--- Possible supplemental federal agency procedures (2
CFR 200.112)
--- Less than arms length leases (2 CFR 200.4XX)
• Solicitation or acceptance of gratuities
--- Organizational rules for items of nominal value
• Disciplinary procedures
• New disclosure procedures (2 CFR 200.113)
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7. Acceptable Methods
• Micro-purchase
--- Purchases of less than $3,500
--- No need to solicit competition
--- Davis-Bacon exception
• Small purchase
--- Purchases of less than $150K
--- Role of recipient or subrecipient small purchase threshold
--- Solicitation of quotations from an “adequate number of sources”
• Competitive sealed bids
--- Formal advertising
--- Results in firm fixed price (lump sum or unit)
--- Conditions required for use (2 CFR 200.320(c)(1))
--- Preferred for construction
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8. Acceptable Methods
• Competition negotiation
--- Competition is expected
--- Fixed price or cost type possible
--- RFP must be publicized
--- Solicitation identifies evaluation criteria and relative
importance
--- Written procedures required for technical evaluation
--- Award to most advantageous officer with price and other
identified factors considered
--- Must be used for architect and engineering services and
price cannot be used as a selection criterion (“Brooks Bill”)
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9. Acceptable Methods
• Non-competitive negotiation
--- “Sole source”
--- Acceptable justifications
----- Only available from a single source
----- Public exigency or emergency
----- Authorized by federal awarding agency
----- Inadequate competition
--- “JOFOC”
• Time and materials
--- Use limited; no other contract type is suitable
--- Ceiling price must be stated
--- Recipient oversight required to assure contractor efficiency and cost
control
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10. Acquisition Planning
• Decision to purchase
--- Avoid unnecessary purchases
--- Consideration of alternatives
----- Leases
----- Third party in-kind contributions
----- Federal excess and surplus property
• The “procurement element” of the grant budget
• SF 424A direct cost categories
--- Travel
--- Equipment
--- Supplies
--- Contractual (services)
--- Construction
--- Other
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11. Acquisition Planning
• Managing the “supply chain”
--- Bundling
--- Breaking out
• Cooperative purchasing
• Value engineering
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12. Obtaining Competition
• “Free and open”
• “Cast a wide net”
--- Offerors’ lists (including prequalified)
--- Website
--- Media
--- FedBizOpps
• Affirmative steps (2 CFR 200.321) to solicit:
--- Minority Business Enterprises (MBE)
--- Small Business Enterprises (SBE)
--- Women-Owned Business Enterprises (WBE)
--- Labor surplus area firms
• Geographic preference prohibited
• Impermissible restrictions on competition (2 CFR 200.319(a))
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13. Developing Solicitations
• Contractor involvement prohibited
• Components
--- Procurement method
--- Contract type
----- Fixed price
----- Cost type
------- Prohibited: cost plus percentage of cost
--- Contract financing
----- Timing
----- Amounts
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14. Developing Solicitations
• Invitation for bids (IFB)
--- Specifications
--- “Brand name or equal”
--- Salient features
--- Award to the “lowest responsive responsible contractor”
• Request for proposals (RFP)
--- Statement of work (SOW)
--- Deliverables
--- Technical proposal instructions (TPI)
--- Technical evaluation criteria (TEC)
----- Arithmatic or adjectival
--- “Two step” procurement
----- “Best and final offers” (BAFO)
• Special rules for audit procurement (2 CFR 200.509)
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15. Source Evaluation
• Responsiveness
--- Timeliness
--- Completeness
--- Correctness
• Responsibility
--- Integrity
--- Past performance
--- Compliance with public policy
--- Financial and technical resources
• Application of evaluation criteria
• Vetting
--- www.SAM.gov (EPLS)
--- 2 CFR 180
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16. Source Evaluation
• Cost or price analysis
--- Required in all procurements above the
Simplified Acquisition Threshold
--- Required independent estimate prior to
solicitation (e.g., grant budget)
--- How was the offer solicited?
--- Separate negotiation of profit (if costs are broken
out)
--- Uniform cost principles apply (Subpart E, 2 CFR
200)
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17. Source Selection
• Documentation
--- Avoid “black box” purchasing
• The “sound and complete” contract
--- Offer
--- Acceptance
--- Legal content
--- Consideration
--- Jurisdiction
--- Obligations
--- Rights and remedies
--- Severability
• Required federal clauses
--- 2 CFR 200, Appendix II
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18. Contract Administration
• 2 CFR 200.318(b)
• Objectives: performance and compliance
• Access to contractor and its records?
• Avoidance of interference
• What tools are available?
--- Fixed price contracts
--- Cost-type contracts
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19. Contract Administration
• Supplies and equipment
--- Delivery
--- Inspection
--- Acceptance
--- Payment
----- Retainage
--- Warranties
• Services and construction
--- Oversight of work process
--- Delivery
--- Inspection
--- Acceptance
--- Payment
--- Warranties
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20. Procurement Records
• 2 CFR 200.318(i)
• “History of the procurement”
--- Rationale for procurement method
--- Rationale for selection of contract type
--- Source evaluation and selection
--- Basis for contract price
• “An audit trail from the beginning”
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21. Questions
• Now
• Later
--- Bob Lloyd
--- consultlloyd@aol.com
--- Telephone: (864) 235-8680
--- Fax: (864) 235-1465
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