Effective date of OMB’s Procurement Standards extended

By John D'Amico
May 25, 2017

On December 26, 2013, the US Office of Management and Budget (OMB) published 2 CFR 200, “Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards” – also referred to as the Uniform Guidance (UG). One of the most significant changes introduced by the UG relates to procurement standards for non-Federal entities.

The UG became effective for all new Federal awards, as well as incremental funding of existing awards, that were awarded after December 26, 2014. Federal awards made prior to this date would still be subject to the OMB’s Circular A-110 and Circular A-122.

However, on September 10, 2015, the OMB issued a Federal Register notice that granted a two-year grace period for compliance with their procurement standards – rendering the original standards’ implementation date to fiscal years beginning on or after December 31, 2016.

On May 17, 2017, the OMB issued a correcting amendment extending the effective date of the procurement standards under the Uniform Guidance (UG).

What this means for you

The grace period now extends through December 25, 2017 – meaning that non-Federal entities with fiscal years beginning on or after December 26, 2017 must implement changes to their procurement policies and procedures in accordance with the procurement standards set in Title 2 CFR 200.317 through 200.326 in the UG.

The OMB has advised that this will be the final grace period. Therefore, non-Federal entities should begin preparing for implementation prior to the extended implementation date if they have not already done so.

It is also worth noting that entities with year-ends beginning on or after December 26, 2016 were already required to adopt the UG’s procurement policies. Entities that chose not to during the grace period were required to document that decision, as mandated by Title 2 CFR 200.110.

The five categories of procurement

The UG also establishes five procurement categories, outlined below:

Micro-purchase – Under the new standards, micro-purchases are the acquisition of supplies or services costing less than $3,000. They may be awarded without soliciting competitive quotations if the nonprofit considers the price to be reasonable.

Small purchase – Services, supplies or other property costing less than $150,000 are now considered “small purchase” – and are subject to new, relatively simple and informal procurement methods. Nonprofits must obtain price or rate quotations from an adequate number of qualified sources. The standards do not define “adequate number”.

Sealed bids Sealed bids are used for purchases over $150,000 and primarily for construction contracts. Sealed bids are publicly solicited and a firm price contract is awarded to the responsible bidder. Generally, the lowest bid is selected.

Competitive proposals – Competitive proposals are used for procurements over $150,000 and require a formal solicitation. They can be either fixed-price or cost-reimbursement contracts. Competitive bids are used when sealed bids are not appropriate. The contract is awarded to the proposal that is most advantageous to the program.

Sole source – This category applies to procurements where the item is only available from a single source, or when there is a public emergency that makes a competitive proposal process too time-consuming. Sole source procurements require approval from the Federal or pass-through funding source.

Conclusion

While the implementation date of December 26, 2017 seems distant, recipients of Federal awards should review the standards; determine the impact on their organization; and work with advisors to develop documentation and compliance policies in accordance with the UG starting now.

For more information:

If you have any questions regarding your current procurement practices, or need additional information on compliance with the OMB’s procurement standards, please contact your Marks Paneth partner, or John D’Amico, CPA, Director, at 212.710.1808 or via email.

Learn more about Marks Paneth’s Nonprofit Practice.


About John D'Amico

John D'Amico, CPA, is a Director with the Professional Standards Group at Marks Paneth LLP and provides quality control services to the firm's Nonprofit, Government & Healthcare Group. He specializes in quality reviews of nonprofit organizations' audits and is part of a team that reviews all attest engagements, provides consultation on accounting and attestation matters, tests and monitors the firm's quality review policies and procedures. He also develops and delivers training material related to accounting... READ MORE +


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