Breaking Down the New Uniform Guidance Procurement Standards
Tom Rogers
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The change shouldn’t have surprised anyone in the Federal grantee community. The Procurement Standards were part of the original UG Super Circular which went into effect in 2015. However, because the changes to procurement policies, processes and systems were so sweeping, non-Federal entities were given an additional 24 months to prepare.
With no further delays on the horizon, non-Federal entities – many of which are nonprofit organizations – must now comply with all of the new procurement requirements. To better understand what they’re all about, here’s a breakdown of the 10 key sections.
This first standard applies only to states, and simply outlines which sections of the standards apply to states and which apply to all other non-Federal entities. This is more about clarification than new requirements – nothing big here.
The general procurement standards are a hodgepodge of “good” procurement practices as defined by the OMB. They address a variety of topics including documentation requirements, conflicts of interest, oversight responsibilities and the avoidance of duplicative and unnecessary purchases. In general, though, these standards are meant to provide a solid foundation for your organization’s overall procurement practices.
The competition standards focus heavily on ensuring fair and open competition in your solicitations for goods and services. The standards are designed to provide the opportunity for broad participation, ensure solicitation requirements are accurate and complete, and reduce the potential for unfair advantage among bidding vendors.
One of the biggest changes in the standards is the requirement that non-Federal entities select one of five approved methods each time a procurement is made. The objective here is to create more rigor in the procurement process as the dollar amount gets more material. The five approved methodologies are:
While some or all of these methodologies are already prevalent in many state and local governments, they are new to many nonprofits and will likely require significant changes to procurement processes and systems. Each methodology has its own unique requirements and, depending on the complexity of your organization, it’s possible you may need to use each of the five methodologies at different points in time.
This series of standards aligns with §200.319 regarding the promotion of fair and open competition, and requires that “non-Federal entities take all necessary affirmative steps to assure that minority businesses, women's business enterprises, and labor surplus area firms are used when possible.” The focus here is clear: non-Federal entities must take affirmative steps to include small and minority businesses, women owned businesses and labor surplus area firms in their solicitation processes, and that these businesses are provided fair opportunities to be awarded work. Six affirmative steps are defined to meet this standard.
The recovered materials standard applies only to state agencies or an agency that is a political subdivision of a state (and its contractors). This standard requires that bid specifications consider the total use of recovered (recycled, reused, or up-cycled) materials in any single procurement costing $10,000 or more, or any quantity of a single item that exceeds $10,000 spend during a single fiscal year. This standard also calls upon applicable grantees to choose eco-friendly solid waste management providers for their organizations.
While most organizations perform some level of cost analysis as part of their solicitation and procurement process, these standards provide specific guidelines around when cost analysis is required and the types of activities that should be performed and documented. A major requirement is that non-Federal entities “perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold, including contract modifications.” This cost analysis requirement applies both to pre-solicitation (i.e. before receiving bids or proposals) and post-solicitation (i.e. comparing apples-to-apples costs once bids and proposals are received).
Organizations will need to not only ensure they perform an appropriate level of analysis, but also properly document the work that they did. Other requirements include negotiating profit as a separate element of price when there is no price competition (i.e. sole source), and the disallowance of certain types of pricing structures for specific types of contracts.
To assure the accuracy and completeness of solicitations, Federal agencies as well as pass-through entities have the right to review and approve details of proposed solicitations before the solicitation is made. While the standards focus heavily on reviewing technical specifications, they also provide for review of requests for proposals, independent bids, independent cost estimates and other pre-solicitation documents. This means that your organization will need to develop, document and maintain information on all of the key aspects of your solicitations, and have that documentation ready for review upon request.
The good news is that you can become exempt from these pre-procurement reviews by having your Federal awarding agency, or pass through entity, review and certify your procurement system. You can also self-certify by providing written assurances that you’re complying with these standards. You’ll need to cite the specific policies, procedures and systems you use to maintain that compliance. However, if you self-certify, you still remain open to a review should an agency or pass through entity choose to do one.
The bonding requirements apply only to construction or facility improvement contracts or subcontracts exceeding the Simplified Acquisition Threshold. In these situations, the Federal awarding agency or pass-through entity may accept the bonding policy and requirements of the non-Federal entity if a determination is made that the Federal interest is adequately protected. In cases where such a determination has not been made, the standard outlines three minimum requirements you must follow for bonding.
This final section of the procurement standards requires that all contracts made by non-Federal entities using Federal awards must contain all applicable provisions defined in Appendix II to Part 200—Contract Provisions for Non-Federal Entity Contracts Under Federal Awards. There are 10 subsections to the appendix that cover a variety of contractual clauses including things like termination for cause and convenience, lobbying and rights to inventions. The applicability of these clauses can change from contract-to-contract, so it’s critical your organization establish a control process for the incorporation of the appropriate clauses, when applicable.
These new procurement regulations can seem overwhelming. And to many, they are one big, massive headache.
But the reality is they’re here, and the time to act on them is now.
Tom is Founder & CEO of Vendor Centric, a consulting firm that helps organizations adopt a risk-based approach to vendor management. Connect with Tom on LinkedIn or drop him a note at trogers@vendorcentric.com.
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