OMB Circular A-81 // 2 CFR 200 Procurement Standards - §200.317 - §200.326 and Appendix II Burr Millsap, CPA Associate VP for Administration & Finance 1 Summary: To deliver on the promise of a 21st-Century government that is more efficient, effective and transparent, the Office of Management and Budget (OMB) is streamlining the Federal government’s guidance on Administrative Requirements, Cost Principles, and Audit Requirements for Federal awards. These modifications are a key component of a larger Federal effort to more effectively focus Federal resources on improving performance and outcomes while ensuring the financial integrity of taxpayer dollars in partnership with non- Federal stakeholders. This guidance provides a governmentwide framework for grants management which will be complemented by additional efforts to strengthen program outcomes through innovative and effective use of grantmaking models, performance metrics, and evaluation. This reform of OMB guidance will reduce administrative burden for non-Federal entities receiving Federal awards while reducing the risk of
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OMB Circular A-81 // 2 CFR 200 Procurement Standards - §200.317 - §200.326 and Appendix II Burr Millsap, CPA Associate VP for Administration & Finance.
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To deliver on the promise of a 21st-Century government that is more efficient, effective and transparent, the Office of Management and Budget (OMB) is streamlining the Federal government’s guidance on Administrative Requirements, Cost Principles, and Audit Requirements for Federal awards. These modifications are a key component of a larger Federal effort to more effectively focus Federal resources on improving performance and outcomes while ensuring the financial integrity of taxpayer dollars in partnership with non-Federal stakeholders. This guidance provides a governmentwide framework for grants management which will be complemented by additional efforts to strengthen program outcomes through innovative and effective use of grantmaking models, performance metrics, and evaluation. This reform of OMB guidance will reduce administrative burden for non-Federal entities receiving Federal awards while reducing the risk of waste, fraud and abuse.
1. A-21 Cost Principles for Educational Institutions
2. A-50 Audit Followup
3. A-87 Cost Principles for State, Local and Indian Tribal Governments
4. A-89 Catalog of Federal Domestic Assistance
5. A-102 Grants and Cooperative Agreements With State and Local Governments
6. A-110 Uniform Administrative Requirement for Grants and Other Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations
7. A-122 Cost Principles for Non-Profit Organizations
8. A-133 Audits of States, Local Governments and Non-Profit Organizations
When procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. The state will comply with § 200.322 Procurement of recovered materials and ensure that every purchase order or other contract includes any clauses required by section § 200.326 Contract provisions. All other non-Federal entities, including subrecipients of a state, will follow §§ 200.318 General procurement standards through 200.326 Contract provisions.
(Note: There is a question whether this blanket provision also applies to state-supported colleges and universities. For now, must assume “No.”)
§200.318 - General Procurement Standards NFE should avoid Time-and-Material contracts, but may use
them only after determining: (1) no other contract type is suitable, (2) there is a ceiling price above which supplier has the risk, and (3) NFE asserts strong oversight that supplier uses efficient methods and cost controls
NFE alone (i.e., not the awarding agency) is responsible for settlement of all contractual and administrative issues (awarding agency is responsible only if matter is of Federal concern; refer law
violations to appropriate local, state, or Federal authority having jurisdiction) (any of the following)
NFE must ensure that all lists of prequalified sources are current and include enough of them to ensure maximum open and free competition. Potential sources must not be prevented from qualifying during the solicitation period.
§200.320 – Methods of Procurement to be Followed Competitive Proposals (above the Simplified Acquisition Threshold)
If used, here are the requirements (all of the following)
RFPs must be publicized
RFPs must identify all evaluation factors and their relative importance
Any response must be considered to the maximum extent practical
Proposals must be solicited from an adequate number of qualified sources
There must be a written method for conducting technical evaluations of responses and for selecting recipients
Contracts must be awarded to the responsible source whose proposal is most advantageous to the program, with price and other factors considered
When soliciting qualifications-based A&E professional services subject to negotiation, cannot solicit other types of services even though a firm may be able to provide them
§200.321 – Contracting with Small and Minority Businesses, Women’s Business Enterprises, and Labor Surplus Area Firms
Must take all necessary affirmative steps to assure such entities are used when possible
Affirmative steps include (all of the following) Placing such entities on solicitation lists Assuring that such entities are solicited whenever they are potential
sources Dividing total requirement, when economically feasible, in to smaller
tasks or quantities to permit maximum participation by such entities Establishing delivery schedules, where requirements permit, which
encourage participation by such entities Using such organizations as Small Business Administration and the
Minority Business Development Agency Requiring prime contractors to take the same above affirmative steps
§200.322 – Procurement of Recovered Materials Section 6002 of the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act
Procuring only items designated in guidelines of the EPA at 40 CFR Part 247 (all of the following)
Contain the highest percentage of recovered materials practicable, consistent with maintaining a satisfactory level of competition, where the purchase price of the item exceeds $10,00 or the value of the quantity acquired by the preceding fiscal year exceeded $10,000
Procuring solid waste management services in a manner that maximizes energy and resource recovery
Establishing an affirmative procurement program for procurement of recovered materials identified in the EPA guidelines
Must negotiate profit as a separate element of price for each contract in which there is no price competition and in all cases where cost analysis is performed
Must consider (all of the following)
Complexity of the work to be performed
Risk borne by the contractor
Contractor’s investment
Amount of subcontracting
Quality of record of past performance
Industry profit rates in the geographical area for similar
Costs or prices based on estimated costs are allowable only to the extent that costs incurred or cost estimated included in negotiated prices would be allowable under Cost Principles. NFE may reference its own cost principles that comply with Federal cost principles.
Must not use cost plus percentage of cost and percentage of construction cost methods
§200.324 – Federal Awarding Agency or Pass-Through Entity Review
If Federal awarding agency or pass-through entity requests, NFE must make available solicitations and cost estimates under the following conditions
NFE’s procurement standards don’t comply with A-81 The procurement may exceed the Simplified Acquisition
Threshold and any of the following conditions apply Procurement is to be awarded without competition Only one response / offer is received Specifies a “brand name” Procurement is sealed bid and is to be awarded to other
than low bid Proposed modification changes the scope or increases the
§200.324 – Federal Awarding Agency or Pass-Through Entity Review
If Federal awarding agency or pass-through entity requests, NFE must make available solicitations and cost estimates under the following conditions (continued)
If NFE’s procurement standards do comply with A-81, then it is exempt from §200.324 (b)
NFE may request review for compliance certification by the Federal awarding agency or pass-through entity. Generally, these reviews must occur where
There is high-dollar funding and
Third party contracts are awarded regularly
NFE may self-certify
But Federal awarding agency still has right to survey system and may rely on NFE’s written assurances of compliance
Assurances must cite specific policies, procedures, regulations, or standards
§200.325 – Bonding Requirements For construction or facility improvement contracts or subcontracts exceeding the
Simplified Acquisition Threshold
Federal awarding agency or pass-through entity may accept NFE’s bonding policy and requirements if either determines that Federal interests are protected by such policy
If no determination has been made
Each bidder must provide a bid guarantee of 5% of the bid price. . . assuring that the bidder will, upon bid acceptance, execute such contractual documents as may be required within the specified time frame (any of the following)
Bid bond,
Certified check, or
Other negotiable instrument
Contractor must submit a performance bond of 100% of the contract price, to secure fulfillment of all contractor obligations under the contract
Contractor must submit a payment bond of 100% of the contract price, to assure payment of all persons supplying labor and material under the contract
Remedies for Violation or Breach of Contract. For contracts exceeding Simplified Acquisition Threshold must address administrative, contractual, or legal remedies in instances where contractors violate or breach contract terms, and provide for such sanctions and penalties as appropriate
Termination for Cause or Convenience. All contracts exceeding $10,000 must address termination for cause and for convenience by the NFE, including the manner by which it will be effected and the basis for settlement
Equal Employment Opportunity. Contracts that meet the definition of “federally assisted construction contract” (41 CFR Part 60-1.3) must include the equal opportunity clause per 41 CFR Part 60-1.4(b), in accordance with Executive Order 11246, “Equal Employment Opportunity” (30 FR 12319, 12935, 3 CFR Part, 1964-1965 Comp., p. 339) as amended by Executive Order 11375, “Amending Executive Order 11246 Relating to Equal Employment Opportunity,” and implementing regulations at 41 CFR Part 60, “Office of Federal Contract Compliance Programs, Equal Employment Opportunity, Department of Labor.”
§200.326 – Contract Provisions (Appendix II) Davis-Bacon Act // Prevailing Wage. When required by Federal program legislation, all
prime construction contracts in excess of $2,000 awarded by NFEs must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). Contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. Contractors must be required to pay wages not less than once a week. NFE must place a copy of the current prevailing wage determination issued by the Department of Labor in each solicitation. The decision to award a contract or subcontract must be conditioned upon the acceptance of the wage determination. NFE must report all suspected or reported violation to the Federal awarding agency. The contracts must also include a provision for compliance with the Copeland “Anti-Kickback” Act (40 U.S.C. 3145), as supplemented by Department of Labor Regulations (29 CFR Part 3, “Contractors and Subcontractors on Public Building or Public Work Finance in Whole or in Part by Loans or Grants from the United States”). The act provides that each contractor or subrecipient must be prohibited from inducing, by any means, any person employed in the construction, completion, or repair of public work, to give up any part of the compensation to which he or she is otherwise entitled. NFE must report all suspected or reported violations to the Federal awarding agency.
§200.326 – Contract Provisions (Appendix II) Work Hours and Safety Standards. Contracts in excess of $100,000
that involve the employment of mechanics or laborers must include a provision for compliance with 40 U.S.C. 3702 and 3704, as supplemented by Department of Labor regulations (29 CFR Part 5). Each contractor must be required to compute the wages of every mechanic and laborer on the basis of a standard work wee of 40 hours. Work in excess of the standard work week is permissible provided that the worker is compensated at a rate not less than one and a half times the basic rate of pay for all hours worked in excess of 40 hours in the work week. The requirements of 40 U.S.C. 3704 are applicable to construction work and provide that no laborer must be required to work in surroundings or under working conditions which are unsanitary, hazardous, or dangerous. These requirements do not apply to the purchases of supplies or materials or articles ordinarily available on the open market, or contracts for transportation or transmission of intelligence.
Rights to Inventions. If the Federal award meets the definition of “funding agreement” under 37 CFR §401.2(a) and the recipient or subrecipient wishes to enter into a contract with a small business firm or nonprofit organization regarding the substitution of parties, assignment or performance of experimental, development, or research work under that “funding agreement,” the recipient or subrecipient must comply with the requirements of 37 CFR Part 401, “Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under Government Grants, Contracts and Cooperative Agreements,” and any implementing regulations issued by the awarding agency.
Clean Air Act // Federal Water Pollution Control Act. Contracts and subgrants of amounts in excess of $150,000 must contain a provision that requires the non-Federal award (NFE?) to agree to comply with all applicable standards, orders or regulations issued pursuant to the Clean Air Act (42 U.S.C. 7401-7671q) and the Federal Water Pollution Control Act as amended (33 U.S.C. 1251-1387). Violations must be reported to the Federal awarding agency and the Regional Office of the EPA.
Energy Efficiency / Conservation. Mandatory standards and policies relating to energy efficiency which are contained in the state energy conservation plan issued in compliance with the Energy Policy and Conservation Act (42 U.S.C. 6201).
Debarment / Suspension. A contract award (see 2 CFR 180.220) must not be made to parties listed on the governmentwide Excluded Parties List System in the System for Award Management (SAM), in accordance with OMB guidelines at 2 CFR 180 that implement Executive Orders 12549 (3 CFR Part 1986 Comp., p. 189) and 12689 (3 CFR Part 1989 Comp., p. 235), “Debarment and Suspension.” SAM contains the names of parties debarred, suspended, or otherwise excluded by agencies, as well as partied declared ineligible under statutory or regulatory authority other than Executive Order 12549.
Anti-Lobbying. Contractors that apply or bid for an award of $100,000 or more must file the required certification. Each tier certifies to the tier above that it will not and has not used Federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of an agency, a member of Congress, officer or employee of Congress, or an employee of a member of Congress in connection with obtaining any Federal contract, grant or any other award covered by 31 U.S.C. 1352. Each tier must also disclose any lobbying with non-Federal funds that takes place in connection with obtaining any Federal award. Such disclosures are forwarded from tier to tier up to the non-Federal award.