4C. Financial: Are You Ready for the Bear Claw ...
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4C. Financial: Are You Ready for the Bear Claw? Procurement Under the Uniform Guidance
CAPLAW 2015 National Training Conference
Thursday, June 11, 2015
4 pm – 5:30 pm
Portland Marriott Downtown Waterfront
Handouts:
PowerPoint Slides Reference Materials
Janet Johnson, CPA, CMA Senior Manager Wipfli, LLP [email protected] 608.274.1980
CAPLAW 2015 National Training Conference
June 10 – 12, 2015 | Portland, OR | Portland Marriott Downtown Waterfront
NONPROFIT AND GOVERNMENT PRACTICE
www.wipfli.com/ngp | 888.876.4992
Reproduction or use of any training materials in this manual, except within a participant’s agency without express written permission is prohibited by copyright law. © Wipfli LLP
Are You Ready for the Bear Claw?
Procurement under the Super Circular
Thursday, June 11, 2015 4:00 pm – 5:30 pm
Presented by:
Janet S. Johnson, CPA, CMA, Senior Manager
Are You Ready for the Bear Claw? Procurement Under Uniform Guidance 1
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Are You Ready for the Bear Claw? Procurement Under Uniform Guidance
Trainer: Janet S. Johnson, CPA, CMA
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Materials/Disclaimer
Please note that these materials are incomplete without the accompanying oral comments by the trainer(s).
These materials are informational and educational in nature and represent the speakers' own views. These materials are for the purchasing agency’s use only and not for distribution outside of the agency or publishing on a public website.
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Introductions
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Outcomes
• Explore the new procurement regulations:– Similarities and differences from the current
regulations
• Your next steps: When will you implement the procurement
regulations?
What must change for your organization?
Who needs to be involved?
How will you document changes, train staff & implement?
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My Agenda
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What’s Changed
Pros and Cons of Early Implementation
Next Steps
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Your Agenda
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Definition
Procurement:• The acquisition of goods and services to be
used internally by the organization or to carry out a grant or contract-funded project
• The procurement process includes the decisionto purchase as well as the process to complete the purchase
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Procurement Regulations
References:• 2 CFR Part 200.317 – 326, applies to all types
of non-Federal entities
• 45 CFR 75.326 – 334, applies to grants from DHHS
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§200.110 Effective Date
Effective DateFederal awarding agencies must implement effective 12/26/2014Audit requirements effective for fiscal years beginning after 12/26/2014
Non-Federal entities may delay implementation of procurement standardsfor 1 fiscal year
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What Is the Bear Claw?
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§200.318 General procurement standards
(a) Must use own documented procurement procedures which reflect applicable laws and regulations
(c) (1)Must maintain written standards of conduct covering conflicts of interest
(2) NEW If the non-Federal entity has a parent, affiliate, or subsidiary organization that is not a government entity, must have written standards of conduct covering organizational conflicts of interest
11§45 CFR Part 75.327
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§200.318 General procurement standards
(d) Avoid purchasing unnecessary or duplicative (NEW) items. Lease vs. purchase analysis where appropriate
(e) Encouraged to enter into state and local intergovernmental or inter-entity agreements NEW
12§45 CFR Part 75.327
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§200.318 General procurement standards
(f) NEW Encouraged to use Federal excess and surplus property
(g) NEW Encouraged to use value engineering in construction projects. (Analysis of each contract item to ensure overall lower cost)
(h) Award contracts to responsible contractors. Consider integrity, compliance with public policy, records of past performance and financial and technical resources
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§45 CFR Part 75.327
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§200.318 General procurement standards
(i) Maintain records with rationale for the method of procurement, selection of contract type, contractor selection and basis for price
(j) NEW May use time and materials contract in some situations
(k) Non-federal entity is responsible for settlement of all contractual and administrative issues
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§45 CFR Part 75.327
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§200.319 Competition
(a) Full and open competition
(b) NEW No geographic preferences unless mandated by statute
(c) Must have written procedures; name brands used only as a description
(d) NEW Pre-qualified contractors: Must ensure lists are current and include enough qualified sources to ensure competition
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§45 CFR Part 75.328
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Pre-Qualified Contractors
Best Practice:• Price comparisons for routine supplies may be
performed at the beginning of the year to identify contractors to be used for the entire year
• Price a list of such items in total, not by individual item, and include shipping
• Ask for discounts for annual purchasing agreements
• Develop a list of qualified contractors
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FAQs from COFAR – August 2014
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§200.320 Methods of procurement to be followed
(a) NEW Micro-purchase:• Aggregate dollar amount per purchase < $3,000
Distribute equitably among qualified suppliers
• May be awarded without competitive quotes
(b) Small purchase procedures:• Up to $150,000 (Simplified Acquisition Threshold)
• Relatively simple and informal
• Competition is required from adequate number of qualified sources
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§45 CFR Part 75.329
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§200.320 Methods of procurement to be followed
Greater than $150,000 (SAT), use sealed bids or competitive proposals
(c) Sealed bids:(1) Required conditions:
(i) Complete, adequate and realistic specifications
(ii) Two or more responsible bidders
(iii) Selection can be made principally on price
(2) Requirements:(i) For units of government, bids publicly advertised
(ii) Bids include all information needed for proper response
(iii) For units of government, bids publicly opened
(iv) Firm fixed price contract awarded
(v) Bids may be rejected if there is a sound documented reason
19§45 CFR Part 75.329
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Sealed Bids
Use sealed bids when:• The award will be made on the basis of price
and other priced-related factors, and
• It is not necessary to conduct discussions with the responding offerors about their bids
From 48 CFR Part 6.401, Federal Acquisition Regulations
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Sealed Bids
The following conditions should be present:
• Complete, adequate and realistic specifications
• Two or more responsible bidders
• Firm fixed priced contract
• Selection made principally on the basis of price
DOE 10 CFR 600.236(c)(2) & 200.320(d)
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§200.320 Methods of procurement to be followed
(d) Competitive proposals: Used when conditions not appropriate for sealed bids. Requirements:(1) Bids publicly advertised
(2) Bids solicited from adequate number of sources
(3) Written method for conducting technical evaluations and for selected contractors
(4) Contract awarded to proposer most advantageous to the program, with price and other factors considered
22§45 CFR Part 75.329
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§200.320 Methods of procurement to be followed
(f) Noncompetitive proposals. Solicitation from only 1 source (sole source). Use in following circumstances:
(1) Item is available only from a single source;
(2) Emergency will not permit a delay resulting from a competitive solicitation;
(3) Federal awarding or pass-through agency expressly authorizes noncompetitive proposal in response to a written request; or
(4) After solicitation, competition is determined inadequate (only 1 proposer)
23§45 CFR Part 75.329
Note: See 200.323 Contract cost and price.
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Sole Source Procurements
• A cost or price analysis is required
• Approval from awarding agency may be required
• Documentation is critical – The need to do a sole sourced procurement and the methods used must be transparent
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§200.321
Contracting with small and minority businesses, women’s business enterprises, and labor surplus area firms (NEW). (A labor surplus area is designated by the Dept. of Labor.)
(a) Non-federal entities must take all necessary affirmative steps to assure minority businesses, women’s business enterprises and labor surplus area firms are used when possible
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* Note: A labor surplus area is designated by the Dept. of Labor.
§45 CFR Part 75.330
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§200.323 Contract cost and price
(a) NEW For procurements over the Simplified Acquisition Threshold, must perform a cost or price analysis before receiving bids or proposals
(b) NEW Must negotiate profit as a separate element of the price for each contract in which there is no price competition and in all cases where cost analysis is performed
(c) The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used
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§45 CFR Part 75.332
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Cost or Price Analysis
• Cost analysis – review and evaluate each element of cost to determine reasonableness, allocability and allowability
• Price analysis – compare market prices of similar goods/services or bids received to evaluate price to be paid
From 2 CFR 215.45, Administrative Regulations for Nonprofits
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Cost or Price Analysis
• Profit Negotiation – Consider: – Complexity of the work,
– Risk borne by the contractor,
– Contractor’s investment,
– Amount of subcontracting,
– Quality of past performance and
– Industry profit rates.
2 CFR 200.322(b)
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§200.324
Federal awarding agency or pass-through entity review (Reg Flags)
(b) Non-Federal entity may be asked to provide procurement documents if:
(1) Procurement procedures fail to comply with OMB standards;
(2) Procurement exceeds the small purchase threshold and is awarded without competition;
(3) Procurement exceeds the small purchase threshold and specified a brand name product;
(4) Procurement exceeds the small purchase threshold and is awarded to other than the lowest bidder under a sealed bid; or
(5) A contract modification changes the scope to exceed the small purchase threshold
29§45 CFR Part 75.333
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Appendix II. Contract Provisions
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A. Administrative, contractual or legal remedies where contractors violate contract terms (all contracts in excess of $150,000) NEW
B. Termination for cause and convenience (contracts in excess of $10,000) NEW
C. Equal Employment Opportunity
D. Davis-Bacon Act when required by Federal program legislation (construction in excess of $2,000)
E. Contract Work Hours and Safety Standards Act (construction in excess of $100,000; or others involving mechanics or laborers in excess of $2,500)
F. Rights to Inventions Made Under a Contract or Agreement
G. Clean Air Act and Federal Water Pollution Control Act (contracts and subgrants in excess of $150,000)
H. Debarment and Suspension
Check contractors at www.sam.gov, System for Award Management, click on “Search Records”
I. Anti-Lobbying (contractors in excess of $100,000)
J. Procurement of recovered materials (units of government)
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From Policies to Process
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Large NPO – Example
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Amount of Purchase
Approvals Solicitation Process
Documentation of Decision
≤ $3,000 (micro-purchase)
• Project Director • At the discretion of the project director
• Distribute equitably among qualified contractors
• Invoice/receipt
$3,001 ≤ $5,000 • Project Director • Select pre-qualified contractor or
• 2 oral bids
• Memo describing oral bids or
• Procurement checklist
• Receipt/invoice
$5,001 ≤ $25,000 • Project Director and
• Div. Vice-President
• Select pre-qualified contractor or
• RFP process
• Proposals and evaluations or
• Purchase order
• Procurement checklist
$25,001 ≤ $100,000
• Project Director,
• Div. Vice-President and
• Fiscal Office
• Select pre-qualified contractor or
• RFP process
• Proposals & evaluations or
• Purchase order
• Procurement checklist
> $100,000 • Project Director,
• Div. Vice-President ,
• Fiscal Office and
• Treasurer (or designee)
• Select pre-qualified contractor or
• RFP process
• Proposals & evaluations or
• Purchase order
• Procurement checklist
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Contract Management
Best Practices:
Develop a contract management process• Who is responsible for ensuring contracts are
carried out successfully?
• What is the monitoring process? – Example: How do you monitor a Weatherization
subcontractor?
• Who signs off on payments?
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Purchasing and Disbursements Internal Control Grid
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Duty A B C D E
Inputs data into contractor master file
Obtains Form W-9 from new contractors
Initiates purchases
Authorizes purchases
Prepares purchase order/requisition
Prepares request for proposal
Administers collection of proposals
Evaluates proposals
Selects contractor
Receives contractor invoice
Approves contractor invoice
Assigns general ledger coding
Inputs invoice into A/P system
Selects A/P to be paid
Runs A/P checks
Reviews checks
Signs checks
Mails checks
Maintains custody of unused checks
Reconciles A/P to general ledger
Performs bank reconciliation
Reviews cancelled checks
Reviews bank reconciliations
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Summary
• Implementation of the new regulations:
– Micro-purchases
– Price analysis for sole source purchases
– Buying agreements
– Federal excess and surplus property
– No geographical preferences
– Labor surplus area firms
– What else?
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Final Advice – Procurement
Questions to ask about your procurement policies & procedures:
1. Do they make sense?
2. Do they work for you?
3. What about the 6:00 news?
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For Information on How We Can Help
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Visit the Wipfli Booth for more details or email
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www.wipfli.com
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Regulation questionsAudit
ProcessHuman Resource
TechnologyLeadership
Evaluation:
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CAPLAW 2015 National Training Conference
June 10 – 12, 2015 | Portland, OR | Portland Marriott Downtown Waterfront
NONPROFIT AND GOVERNMENT PRACTICE
www.wipfli.com/ngp | 888.876.4992
Reproduction or use of any training materials in this manual, except within a participant’s agency without express written permission is prohibited by copyright law. © Wipfli LLP
Reference Materials
for Are You Ready for the Bear Claw?
Procurement under the Super Circular
Procurement Best Practices Worksheet ................................ 1
Wipfli LLP Page 1
Procurement Best Practices 2 CFR Part 200 Procurement Regulations Worksheet
Regulation
Item
Procedure
Change Written
Procedures? (Y/N)
Next Steps
200.22 & 23 “Contract” and “contractor” replace the use of the word “vendor”
You may decide to change “vendor” to “contractor” but it’s not required
200.318(c)(2) Conflict of interest policy for non-governmental parent, affiliate or subsidiary
If this situation exists for you, must include that entity in your conflict of interest policy
200.318(d) Avoid purchasing duplicative items
How will you track items to avoid duplication? Complications: • Multiple locations • Multiple programs
200.318(f) Enter into buying agreements
• How can you find out about buying agreements in your area?
• Include in written procedures: Before purchasing through a buying agreement, check that it’s the best price
200.318(e) Use Federal excess and surplus property rather than purchasing
How can you find out about Federal surplus property?
200.318(i) Procurement records must include: • Rationale for method
of procurement • Selection of contract
type • Contractor selection
or rejection • Basis for contract
price
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Regulation
Item
Procedure
Change Written
Procedures? (Y/N)
Next Steps
200.319(g) Cannot impose local preferences
Do you have this in your policies?
200.320(a) Micro-purchasing procedures
Can you change your purchasing process to adopt the micro-purchase limit?
200.321 Contracting with small and minority businesses, women’s business enterprises, and labor surplus area firms
Labor surplus areas are designated by the US Dept. of Labor. Review the list of these areas on the DOL website.
200.323 Contract cost and prices analysis required for: • Every procurement in
excess of simplified acquisition threshold ($150,000) before receiving bids, and
• Every sole source contract. (If no price competition, must negotiate profit separately.)
Documentation: • Steps taken to
analyze costs of purchases greater than $150,000
• Steps taken to confirm that the price in a sole source purchase are reasonable
Appendix II. Contract Provisions
New provisions: • Administrative,
contractual or legal remedies for contracts in excess of $150,000
• Termination for cause and convenience for contracts in excess of $10,000
• Mandatory standards relating to energy efficiency
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Regulation
Item
Procedure
Change Written
Procedures? (Y/N)
Next Steps
Construction 200.318(g) Use value engineering for
construction projects Value engineering is a systematic and creative analysis of each contract item or task to ensure that its essential function is provided at the overall lower cost.
200.318(j) Use time and material contracts is no other contract is suitable and the contractor includes a ceiling price that the contractor exceeds at its own risk.
A time and materials contract sets the price at the actual cost of materials and direct labor hours charged at fixed rates. It must include a ceiling price