Micro Purchases, Sole Sourcing
and Property Management
Changes
Tiffany R. Winters, Esq.
twinters@bruman.com
Brustein & Manasevit, PLLC
Fall Forum 2014
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Procurement Applies to Contracts!
UGG- 200.330 (Contracts v. Grants)
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Procurement Standards
UGG- 200.317
Still provides flexibility for States; all other nonfederal
entities follow policies and procedures under Section
200.318-200.326.
UGG- 200.318
All nonfederal entities must have documented
procurement procedures which reflect applicable Federal,
State, and local laws and regulations.
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SEPARATE PROCEDURES WON’T WORK.
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The Steps
What do you need?
2. How can you buy it?
What do you have to do once
you have it?
1.
3.
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Types of Property
Capital assets
Computing devices
Equipment
Special purpose
equipment
Intangible property
Property
Real Property
Supplies
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Property Classifications (cont.)
UGG- 200.12
 Capital assets
 Tangible or intangible assets use in operations having a
useful life of more than one year…
 Includes: Land, buildings, equipment, intellectual
property, software, construction, etc.
UGG- 200.20
Computing devices
 Machines used to acquire, store, analyze, process, public
data and other information electronically.
 Includes accessories for printing, transmitting and
receiving or storing electronic information.
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Property Classifications (cont.)
UGG- 200.33
 Equipment
 Tangible, personal property, having a useful life
of more than one year and a per-unit acquisition
cost of the lesser of the two:
 The capitalization level established by the non-Federal entity for
financial statement purposes, or
 $5,000
UGG- 200.89
 Special Purpose Equipment
 Equipment which is used only for research, medical, scientific or
other technical activities.
 Includes: x-ray machines, surgical instruments, microscopes, etc.
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Property Classifications (cont.)
UGG- 200.59
 Intangible Property
 Property having no physical
existence, such as
trademarks, copyrights,
patents, etc. See also UGG
200.315.
UGG- 200.81
 Property
 Real property or personal
property.
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Property Classifications (cont.)
UGG- 200.78
 Personal Property
Property other than real property. May be tangible
or intangible.
UGG- 200.85
 Real Property
Land and land improvements, structures and
appurtenances thereto, but excludes moveable
machinery and equipment. See also UGG 200.311.
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Property Classifications (cont.)
UGG- 200.94
 Supplies
 Anything that is not equipment is considered supplies.
 A computing device is a supply if the acquisition cost is less than
$5000 regardless of the length of its useful life.
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What if I don’t know whether it’s
allowable?
UGG- 200.407
 Prior Written Approval
• In order to avoid subsequent disallowance:
–Non-Federal entity may seek prior written approval of
cognizant agency (for indirect cost rate) or Federal
awarding agency in advance of the incurrence of special or
unusual costs
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PURCHASING/ PROCUREMENT
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Open Competition
UGG- 200.319(a)
• All procurement transactions must be conducted with full and
open competition.
– Must have protest procedures to handle disputes
• To eliminate unfair advantage, contractors that develop or draft
specifications, requirements, statement of work, and invitations
for bids or RFPs must be excluded from competing for such
procurements.
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Open Competition (cont.)
UGG- 200.319(a)
 Situations that restrict competition:







Unreasonable requirements on vendors to qualify to do business
Requiring unnecessary experience or excessive bonding
Noncompetitive pricing practices
Noncompetitive awards to consultants on retainer
Organizational conflicts of interest
Specifying a brand name
Any arbitrary action in the procurement process
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Open Competition (cont.)
UGG- 200.319(b)
No In-State or Local Preferences.
Must conduct procurements in a matter that
prohibits the use of statutorily or administratively
imposed state or local geographical preferences in
the evaluation of bids or proposals, except where
applicable Federal statutes expressly manage or
encourage geographical preference.
 Does not preempt state licensing laws.
 Exception: architectural and engineering services
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But I Have a Vendor!
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Sole Sourcing Should Be Limited!
UGG- 200.320(f)
• Noncompetitive Proposals
– Procurement through solicitation of a proposal from only one
source and may be used ONLY when one or more of the following
circumstances apply:
1.
2.
3.
4.
The item is available only from a single source;
The public emergency for the requirement will not permit a delay
resulting from competitive solicitation;
The Federal awarding agency or pass-through entity expressly
authorizes noncompetitive proposals in response to written requires
from nonfederal entity; or
After soliciting a number of sources, competition is determined
inadequate.
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THERE ARE SPECIFIC TYPES OF
PROCUREMENT THAT MUST BE
FOLLOWED.
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How to Select Your Vendor
UGG- 200.320
Methods of Procurement
•
•
•
•
•
Micro-purchase
Small purchase procedures
Competitive sealed bids
Competitive proposals
Noncompetitive proposals
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Contact Cost and Price
UGG- 200.323
• Must perform a cost or price
analysis for costs in excess of the
simplified acquisition threshold
($150,000)
• Cost analysis generally means
evaluating the separate cost
elements that make up the total
price (including profit)
• Price analysis generally means
evaluating the total price
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Micro-Purchase
UGG- 200.320(a)
• Acquisition of supplies and services under $3,000
or less.
–$2,000 for acquisitions for construction subject to the
Davis-Bacon Act.
• May be awarded without soliciting competitive
quotations if nonfederal entity considers the cost
reasonable.
• To the extent practicable must distribute micropurchases equitably among qualified suppliers.
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Small Purchase Procedures
UGG- 200.320(b)
• Goods or services that costs less than The Simplified
Acquisition Threshold ($150,000 under 200.88)
– Organization may set lower threshold
• Must obtain price or rate quotes from an adequate number of
qualified sources
• “Relatively simply and informal”
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Competitive
Sealed Bids
UGG- 200.320(c)
• Bids are publically
solicited.
• Appropriate when:
– A complete, adequate and realistic specification or description of good
or service is available;
– Two or more responsible bidders are willing and able to compete
effectively for the business
– Selection of vendor can be made principally based on price and it’s a
firm fixed price contract.
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Competitive Sealed Bids (cont.)
• Sealed bids must:
– Provide sufficient time to submit bids;
– Include all specifications so bidder can properly respond; and
– Be publicly opened at time and place announced in invitation for bids
• Any and all bids may be rejected if there is a sound
documented reason.
• Award is made to the lowest responsive and responsible
bidder.
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Competitive Proposals
UGG- 200.320(d)
• Award contract to
responsible vendor
whose proposal is most
advantageous to the program, considering price and other
factors.
• Generally used when sealed bid is not appropriate.
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Competitive Proposals (cont.)
• Request for proposal (RFP) must be publicized
and identify all evaluation factors and their
relative importance identified.
• Proposals must be solicited from an adequate
number of sources.
• Must have method for evaluating proposals and
selecting the vendor.
• Contracts must be awarded to the responsible
vendor whose proposal is most advantageous to
the program, considering price and other factors.
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Noncompetitive Proposals
Noncompetitive
contract raises “red
flags”
• Ensure persuasive
and adequate
documentation to
facilitate audit
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WATCH FOR CONFLICT OF
INTERESTS
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Conflicts of Interest
UGG- 200.112 and 200.318(c)
• Must maintain written standard of conduct, including conflict of interest
policy.
• A conflict of interest arises when any of the following has a financial or
other interest in the firm selected for award:
–Employee, officer or agent,
–Any member of that person’s immediate family,
–That person’s partner, or
–An organization which employs, or is about to employ,
any of the above or has a financial interest in the firm
selected for award.
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Gratuities
UGG- 200.318(c)(1)
• Officers, employees, and agents of the non-Federal entity
must neither solicit nor accept gratuities, favors, or
anything or monetary value from contractors or parties to
subcontract.
• However. the non-Federal entities may set standards for
situations in which the financial interest is not substantial
or the gift is an unsolicited item of nominal value.
• The standards must provide for disciplinary actions to be
applied for violations of such standards by officers,
employees, or agents of the non-Federal entity.
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Organizational Conflicts of Interest
UGG- 200.318(c)(2)
 If the non-federal entity has a parent, affiliate, or subsidiary
organization that is not a state or local government the entity
must also maintain written standards of conduct covering
organization conflicts of interest!
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Duty to Report Conflicts
UGG- 200.112 and 200.113
 Must disclose in writing any potential conflict in accordance
with applicable Federal awarding agency policy.
 Must disclosure in a timely manner in writing all violations of
Federal criminal law involving fraud, bribery, or gratuity
violations potentially affecting the Federal award.
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THE CONTRACTING PROCESS
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Suspension and Debarment
Cannot contract with vendor who has been
suspended or debarred http://www.sam.gov
Must Review Contracts over $25,000
Appendix II(I)
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Contract Administration
UGG- 200.318
• Nonfederal entities must maintain
oversight to ensure that contractors
perform in accordance with the
terms, conditions, and
specifications of the contract
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Contract Provisions
UGG- 200.326
• Appendix II includes required provisions
(many same as previous requirements)
– Administrative, contractual, legal remedies
– Termination for cause or convenience
– Equal Employment Opportunity requirements
– Davis-Bacon Act
– Etc., all as applicable.
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INVENTORY
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Equipment Standards
UGG- 200.313(b)
• States must use, manage and dispose of equipment acquired
under a Federal award in accordance with State laws and
procedures.
• Other non-Federal entities must follow 200.313(c) through (e).
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Equipment Standards (cont.)
UGG- 200.313(c)
• Must have adequate controls in place to account for
equipment.
• Cannot “encumber” the property without approval.
• Must be used by the program or project for which it
was acquired as long as needed (whether supported
by Federal funds).
• When no longer needed may be used by other
activities in accordance with priority:
• Activities funded by the same Federal awarding agency
• Activities funded by other Federal awarding agencies.
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Equipment Standards (cont.)
UGG- 200.313(c)
• Must make equipment available to use on other
projects or programs provided that such use will
not interfere with the work on the projects or
program for which it was originally acquired.
• When grantee acquiring replacement
equipment, the equipment to be replaced may
be used as a “trade-in” without recourse to
federal agency
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Inventory Management System
UGG- 200.313(d)
• Property records
– Description, serial number or other ID, title info, acquisition date, cost,
percent of federal participation, location, use and condition, and
ultimate disposition
• Physical inventory
– At least every two years
• Control system to prevent loss, damage, theft
– All incident must be investigated
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What about computing devices?
UGG- 200.302(b)(4)
• Internal Controls: Regardless of cost, grantee must maintain
effective control and “safeguard all assets and assure that
they are used solely for authorized purposes.”
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Disposition of Equipment
UGG- 200.313(e)
• When equipment is no longer needed, the
nonfederal entity must request disposition
instructions from the federal awarding agency if
required by the terms of the grant.
–Over $5,000 – pay federal share (explained in UGG)
–Under $5,000 – no accountability
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Disposition of Supplies
UGG- 200.314
•If there is a residual inventory of unused
supplies exceeding $5,000 in total aggregate
value upon termination or completion of the
project or program and the supplies are not
needed for any other federal award, must
compensate the federal government for its
share.
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RECORDS
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Procurement Records
UGG- 200.318(i)
• Must maintain records sufficient to detail the
history of procurement.
• These records will include, but are not limited to:
–Rationale for method of procurement;
–Selection of contract type;
–Contractor selection or rejection; and
–Basis for the contract price.
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Methods for Collection, Transmission and
Storage of Information
UGG- 200.335
• When original records are electronic and cannot
be altered, there is no need to create and retain
paper copies.
• When original records are paper, electronic
versions may be substituted through the use of
duplication or other forms of electronic media
provided they:
– Are subject to periodic quality control reviews,
– Provide reasonable safeguards against alteration; and
– Remain readable.
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Good News?
– COFAR FAQs: One year grace period for
procurement!!
– Must document
whether you are in
compliance
with the old or new
standard.
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~ Legal Disclaimer ~
• This presentation is intended solely to provide general
information and does not constitute legal advice or a legal
service. This presentation does not create a client-lawyer
relationship with Brustein & Manasevit, PLLC and, therefore,
carries none of the protections under the D.C. Rules of
Professional Conduct. Attendance at this presentation, a later
review of any printed or electronic materials, or any follow-up
questions or communications arising out of this presentation
with any attorney at Brustein & Manasevit, PLLC does not
create an attorney-client relationship with Brustein &
Manasevit, PLLC. You should not take any action based upon
any information in this presentation without first consulting
legal counsel familiar with your particular circumstances.
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