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Federal Grant Procurements and Contracts: Some Compliance Tips and Best Practices for Not-for-Profits
Alais L. M. Griffin

Being awarded a federal grant can be a game-changer for a not-for-profit organization. Awards range into the millions of dollars and allow not-for-profits to do more mission-critical work, expand programming, or innovate with new programs. However, federal grant compliance requirements are numerous, exacting and complicated. A failure to comply can lead to federal audits, frozen grant funds, and even legal, financial and reputational risk.  

This post focuses on tips and best practices for federally-funded procurement transactions. It is not exhaustive and does not cover all federal procurement requirements. Always refer to your awarding agency’s regulations and requirements to ensure you are in compliance.

Formal, Written Procurement Policies

As a federal grant recipient, make sure your organization has formal, written procurement policies that are compliant with federal requirements and that your employees understand and follow. The policies should cover at least the areas included below.

Competitive Bidding

Federal regulations and requirements mandate that grant recipients use a competitive bidding process when procuring services with federal funds. All too often, however, federal grant audit reports cite grant recipients for failing to follow this requirement. To help avoid this, you should do following:

  • Use a Request for Proposal (“RFP”) when seeking federally-funded contractors. Make sure the RFP does not include unreasonable requirements that could restrict competition. Be clear and accurate about your procurement needs.
  • Document why you selected a particular contractor, including a cost/price analysis that takes into account the ability to perform.
  • Only make procurement awards to responsible contractors that can perform successfully in accordance with contract terms and conditions.
  • Ensure and document that the selected contractor was not involved in the development of the procurement order.
  • Keep all RFP responses, your selection documentation and other records that show the history of any procurement action.
  • Only enter into sole source contracts (e.g., a noncompetitive award) when absolutely necessary and in accordance with federal sole source requirements. If you must make a sole source procurement, clearly document the justification for that decision. Depending on the dollar amount, you may also need to obtain prior approval from the awarding agency.

Contractor Vetting and Compliance

Once you have selected a contractor, make sure that:

  • The contractor is not on any federal exclusion lists or prohibited from doing federal work (for example, check
  • The contractor’s rates are below the maximum daily or hourly rates allowed by the regulations and that they are reasonable.  
  • If your contract is over $100,000, you acquire and maintain signed lobbying certification forms before you finalize the contract, and acquire and maintain any lobbying disclosure forms and file them with your awarding agency.

Federal Contract Provisions

The contract should have a detailed statement of work. Regulations also require federal contracts to include certain provisions (e.g., Appendix II to 2 C.F.R. Part 200 and Appendix A to 28 C.F.R Part 70), even if they may seem irrelevant to your particular contract.

Codes of Conduct/Conflicts of Interest

  • Maintain a written code of conduct and ensure that your federally-funded contractors do the same. Consider creating a vendor code of conduct and a conflict of interest certification form that your federal contractors must use.
  • Have a documented process to check for organizational conflicts of interest in the contractor selection process (e.g., a contractor related to an employee involved in the award).


Monitor the contractor’s work and its invoices and costs. All costs must be supported and allowable in order to be reimbursed with federal funds.

Federal grant requirements can feel overwhelming but there are many resources both within and outside the government that can help. Check, your awarding agency’s online materials or seek advice from an audit firm or lawyer experienced in federal grant compliance. Feel free to contact Alais Griffin at [email protected] or at 312.741.1037 with any questions and to visit to learn more about its Not-For-Profit Group.

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