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CLIENT ALERT

July 27, 2017

New Federal Procurement Standards: Are You Prepared?

By: Harry Fox, CPA

Beginning in 2018, new procurement standards under the Office of Management and Budget (OMB) Uniform Guidance will go into effect for not-for-profit entities that receive federal grant funds.  These requirements are effective as of January 1, 2018 for calendar year entities and July 1, 2018 for June 30 fiscal year-end entities.

Who is Impacted?
These new requirements effect any not-for-profit entity that receives any federal funding, not just those who meet the Single Audit threshold of federal dollars expended.  Not-for-profits do have the option to implement these new requirements for procurements made using only federal dollars, or on an entity-wide basis for all procurements.

What is Changing?
With the adoption of these new requirements, the goal of the OMB is to provide better accountability and transparency in the procurement process.   The most significant changes require additional documentation surrounding this process.

Conflict of Interest Policies
The standard requires written conflict of interest policies that cover individuals involved in the selection, award, or administration of a contract.  Under the new standard, not-for-profits are also required to have an organizational conflict of interest policy that provides written standards of conduct when dealing with an affiliated entity.

Procurement Procedures
The standard requires written procedures for all procurement transactions under a federal grant.  Additionally, it details the four methods of procurement, based on various purchase thresholds:

  • Micro-purchases (purchases under $3,500)
  • Small purchases ($3,500-$150,000)
  • Sealed bids (over $150,000)
  • Competitive proposals (over $150,000)

Detailed, written procedures are required for each method of procurement.

Procurement Records
Records documenting the rationale for the method of procurement, selection of contract type, and basis for the contract price to detail the history of a procurement are now required.

The above are only a few of the changes under the new procurement standards.  A full detail of all changes may be found in section 2 CFR 200 of the Electronic Code of Federal Regulations at www.ecfr.gov.  A full review of your organization’s procurement policies is necessary to determine compliance as these change may have a significant impact on your current procedures.

For more information, contact Harry Fox at hfox@orba.com, or call him at 312.670.7444.

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