Federal procurement regulations: a focus on Public education

1. Federal procurement regulations:a focus on Public education Fay Tan, JD Zac Christensen, JD, CPPB

2. What Federal Rules/ Guidelines apply? • OMB Uniform Guidance- 2 CFR 200 • Education Department General Administrative Regulations (EDGAR)- 34 CFR 75-99 • Uniform Administrative Requirements, Cost Principles, and Audit 2 CFR 3474 • (by reference) • Utah Code 63G-6a • Utah Administrative Rules R33 • Other applicable code, rules, policies, ordinances, etc.

3. What are we going to talk about?UNIFORM GUIDANCE! Hot dog! • 2 CFR 3474.1: (a) The Department of Education adopts the Office of Management and Budget (OMB) Guidance in 2 CFR part 200, except for 2 CFR 200.102(a) and 2 CFR 200.207(a). Thus, this part gives regulatory effect to the OMB guidance and supplements the guidance as needed for the Department.

4. When does the Uniform Guidance Apply? • 2 cfr 200 .317- when procuring property (Goods) and services under a federal award. • Does not apply to state funded activities- only federal funds • However, these may still apply if you are receiving flow-down funds from USBE that came from the federal government • Example- idea funds

5. What we will cover • §200.318 General procurement standards. • §200.319 Competition. • §200.320 Methods of procurement to be followed. • §200.321 Contracting with small and minority businesses, women's business enterprises, and labor surplus area firms. • §200.323 Contract cost and price. • §200.324 Federal awarding agency or pass-through entity review. • §200.326 Contract provisions.

6. 200.318 General Procurement Standards • Non-federal entity must: • Use own documented procurement policies and procedures which reflect applicable state, local, and tribal laws and regulations, provided the procurements conform to applicable federal law and standards identified within Uniform Guidance • Maintain oversight to ensure contractors perform in accordance with the terms, conditions and specifications of their contracts; • Maintain written standards of conduct covering conflicts of interest –real and/or perceived for staff engaged in the selection, awarding or administration of a contract.

7. 200.318 Cont’d • Non-Federal entities must foster economy and efficiency by: • Avoiding purchasing unnecessary or duplicative items; • Considering consolidating or breaking out procurements, and leasing vs. purchasing alternatives; • Considering entering into intergovernmental agreements or inter-entity agreements for the procurement of common or shared goods and services; and • Using federal surplus equipment and property.

8. 200.318 Cont’d • Non-Federal entities must award contracts only to responsible contractors who are able to perform successfully under the terms and conditions of the contract • Must consider: • Contractor integrity, compliance with public policy; • Record of past performance, financial and tech resources; and • Possible exclusion (200.213 –Suspension and Debarment)

9. 200.318 Cont’d • Non-Federal entities must maintain records sufficient to detail the history of procurement • Records include, but not limited to the following: • Rationale for the method of procurement; • Selection of contract type; • Contractor selection or rejection; and • The basis for the contract price.

10. 200.318 Cont’d • Conflicts of Interest • Pass-through entities must disclose any potential conflicts of interest to the federal Awarding Agency • Policy must include for disciplinary actions to be applied for violations of such standards by officers, employees, or agents for the non-Federal entity • May set standards for situations in which the financial interest is not considered substantial or the gift is an unsolicited item of nominal value (i.e. less than $25)

11. 200.318 Cont’d • What is a conflict of interest? • Unable or appears to be unable to be impartial or make objective decisions; • Financial interest; • Personal relationship; • Not arms length if related entity; • Any tangible benefit to employee or family member.

12. 200.318 Cont’d • Organizational Conflicts of Interest • If the non-Federal entity has a parent, affiliate, or subsidiary organization, the non-Federal entity must also maintain written standards of conduct covering organizational conflicts of interest • Means that because of relationships with a parent company, affiliate, or subsidiary organization, the non-Federal entity is unable to be impartial in conducting a procurement action involving a related organization

13. 200.318 Cont’d • Time and Materials Type Contracts • Use limited-permitted only when no other contract type is suitable; • Ceiling price must be stated; • Recipient or subrecipient must exercise oversight to assure contractor efficiency and cost control.

14. 200.319 Competition • All procurement transactions must be conducted in a manner providing full and open competition. • In order to ensure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft specifications, requirements, statements of work, or invitations to bid or requests for proposals must be excluded from competing for such procurements.

15. 200.319 Cont’d • Some of the situations considered to be restrictive of competition include but are not limited to: • Placing unreasonable requirements on firms in order for them to qualify to do business; • Requiring unnecessary experience and excessive bonding; • Non-competitive pricing practices between firms or between affiliated companies. • Non-competitive contracts to consultants

16. 200.319 Cont’d • Some of the situations considered to be restrictive of competition include but are not limited to: • Organizational conflicts of interest; • Specifying only a “brand name” product instead of allowing “an equal” product to be offered and describing the performance or other relevant requirements of the procurement; and • Any arbitrary action in the procurement process.

17. 200.319 Cont’d • The non-Federal entity must have written procedures for procurement transactions and must ensure that all solicitations: • Incorporate a clear and accurate description of the technical requirements for the material, product or service to be procured, and • Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals.

18. 200.319 Cont’d • The non-Federal entity must ensure that all prequalified lists of persons, firms, or products which are used in acquiring goods and services are current and include enough qualified sources to ensure maximum full and open competition • Must not preclude potential bidders from qualifying during the solicitation period

19. 200.320 Methods of Procurement to be Followed • The non-Federal entity must use one of the following methods of procurement: • Procurement by micro-purchases • Procurement by small purchase procedures • Procurement by sealed bids • Procurement by competitive proposals • Procurement by noncompetitive proposals

20. 200.320 Cont’d

21. 200.320- Micro Purchase • In the acquisition of supplies or services, the aggregate dollar amount does not exceed the threshold which is currently $10,000. • May be awarded without soliciting competitive quotations if the non-Federal entity considers the price to be reasonable; • Must distribute equitably among qualified suppliers as practical. • Davis-Bacon for construction still applies

22. 200.320 Small purchase/ Simplified Acquisition • Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold ($250,000). • Price or rate quotations must be obtained from an adequate number of qualified sources • No cost or price analysis is required

23. 200.320 Sealed Bid • Bids are publicly solicited and a firm fixed price contract (lump sum or unit) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest price. • The sealed bid method is the preferred method for procuring construction. • Formally advertised • All bids will be opened at the time and place prescribed in the invitation for bids • Any or all bids may be rejected if there is a sound documented reason

24. 200.320 Competitive Proposals • The technique of competitive proposals is normally conducted with more than one source submitting an offer, and either a fixed price or cost-reimbursement type contract is awarded. • Requests for proposals must be publicized and identify all evaluation factors and their relative importance. • Proposals must be solicited from an adequate number of qualified sources • The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and for selecting recipients • Contracts must be awarded to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered.

25. 200.320 Non-competitive Proposals • Procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only if one or more of the following circumstances apply: • The item is available only from a single source • An emergency or other necessity for the requirement will not permit a delay resulting from a competitive procurement (poor planning is not an emergency) • The Federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request from the non-Federal entity; • Inadequate competition after multiple attempted solicitations

26. 200.321 DBEs • The non-Federal entity must take all necessary affirmative steps to assure that minority businesses, women’s business enterprises, and labor surplus area firms are used when possible. • Affirmative steps for the above entities must include: • Placing qualified entities on solicitation lists; • Assuring they are solicited whenever they are potential sources

27. 200.323 Contract Cost and price analysis • The non-Federal entity must perform a cost and price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications • The method and degree of analysis is dependent on the facts surrounding the particular procurement situation • Must make independent estimates before receiving bids or proposals

28. 200.323 Cont’d • The non-Federal entity 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 • Consideration must be given to the complexity of the work to be performed, the risk borne by the contractor and the quality of it’s record of past performance • Costs or prices based upon estimated costs for contracts under the Federal award are allowable only to the extent that costs incurred or cost estimates included in negotiated prices would be allowable for the non-Federal entity under Subpart E–Cost Principles. • The cost plus a percentage of cost and percentage of construction cost methods must not be used.

29. 200.324 Federal Awarding Agency or pass through entity review • The non-Federal entity must make available, upon request of the Federal awarding agency or pass-through, entity, technical specifications on proposed procurements when there is a belief by the Federal awarding agency such review is needed to ensure the item or service specified is the one being proposed for acquisition. • The non-Federal entity must make available, upon request of the Federal awarding agency or pass-through entity pre-procurement review procurement documents such as: • Requests for Proposals or • Invitations for Bids, or • Independent cost estimates

30. 200.324 Cont’d • The above procurement documents must be made available when: • The non-Federal entity’s procurement procedures or operation fails to comply with the Procurement Standards: • The procurement is expected to exceed the Simplified Acquisition Threshold and: • Is to be awarded without competition or only one bid is received in responses to a solicitation • Specifies a “brand name” product

31. 200.324 Cont’d • The above procurement documents must be made available when: • The procurement is expected to exceed the Simplified Acquisition Threshold and: • It is to be awarded to other than the apparent low bidder under a sealed bid procurement; or • The proposed contact modification changes the scope of a contract or increases the contract award in excess of the Simplified Acquisition Threshold

32. 200.324 Cont’d • Two Ways to Avoid the Pre-Procurement Review: • Federal awarding agency or pass-through entity review and certification of procurement system. • Entity self-certification of its procurement system. • Must not limit the Federal awarding agency's right to survey the system • Federal awarding agency may rely on written assurances from the non-Federal entity • Entity must cite specific policies, procedures, regulations, or standards as being in compliance and have its system available for review

33. 200.326 Contract Provisions • The non-Federal entity’s contracts must contain the applicable provisions described to Appendix II to Part 200–Contract Provisions for non-Federal Entity Contracts Under Federal Awards.

34. 2 CFR 200.338- Remedies for Noncompliance • Temporarily withhold cash payments pending correction of the deficiency. • Disallow all or part of the cost of the activity or action not in compliance. • Wholly or partly suspend or terminate the Federal award. • Initiate suspension or debarment proceedings. • Withhold further Federal awards for the project or program.

35. 200.320 Contracting , Analysis , Compliance, Reporting and Audit Analysis and Bid Process Provisions Needs 1 2 Start Provisions (1)Necessary (2) Reasonable and (3) Allocable Costs by Program Staff 3 200.320 Procurement Methods _-CH Legal /Local - more restrictive than 200.88 SAM $250k and $10,000 for Micro purchase 200.67 Contract and Approval Process Contract Monitoring & Certification of (1)200.404 Reasonable, (2) 200.403 Necessary and (3) 200.405 Allocable Costs by Program Staff Provisios Drawdown, Reporting & CFO Certification Documented 200.403 Audit Process 200.501 $750K 6 5 4 PO End 200.326 CFR Contract provisions Other: 200. 318 Inter Local Agreements includes CFR Certifications & 1 & 3 ( Sole Source – Rare event -200.320)

36. The End Additional Resources at: https://bit.ly/2kGLAtf and http://grants.thompson.com/free-resources

37. Additional Supporting InformationCost & Price Analysis • “Cost analysis is the review and evaluation of any separate cost elements and profit or fee in an offeror’s or contractor’s proposal, as needed to determine a fair and reasonable price or to determine cost realism, and the application of judgment to determine how well the proposed costs represent what the cost of the contract should be, assuming reasonable economy and efficiency.” • (FAR 15.404-1(c)(1))

38. Cost & Price Analysis Cont’d • “Price analysis is the process of examining and evaluating a proposed price without evaluating its separate cost elements and proposed profit.” • (FAR 15.404-1(b))

39. Price Analysis Techniques • Comparison of proposed prices received in response to the solicitation* • Comparison of proposed prices to historical prices, whether by the government or other than the government, for the same or similar items* • Use of parametric estimating techniques • Comparison with competitive published price lists • Comparison with independent cost estimates • Comparison of proposed prices with prices obtained through market research for the same or similar items * Preferred price analysis techniques (FAR 15.404-1(b)(3))– Products or services being compared have to have substantially similar characteristics to make comparison useful

40. Price Comparison • Generally considered one of the best bases for price analysis, because all offers were submitted to meet the same requirement during the same time period. (FAR 15.404-1(b)(2)(i)) • Any proposed price used as a basis for price analysis must meet the following general requirements: • The price must be from a responsible firm. • The price must be submitted by a firm competing independently for contract award. • The price must be part of an offer that meets Buyer requirements.

41. Historical Prices • When using historical prices to analyze price reasonableness, get good answers to the following questions: • Has the product been purchased before? • Has there been a significant time-lapse from the previous purchase? • Are the terms and conditions significantly different? • Is the reasonableness of the historical price uncertain? • What was the historical price? • Is the comparison valid?

42. Historical Prices Cont’d • Factors THAT MAY AFFECT COMPARABILITY: • Market conditions • Quantity or size • Geographic location • Purchasing power of the dollar • Extent of competition • Any unique requirements

43. Parametric Estimating • Cost estimating relationships (CERs) are used to develop parametric estimates or rough yardstick estimates. • A parametric CER is a method for estimating prices based on the relationship of past prices with one or more product physical or performance characteristics (e.g., dollars per pound, dollars per horsepower, or other units). • Whenever you can relate item price with the value of one or more physical or performance characteristics, you can use the relationship to estimate the price of a similar product. • (FAR 15.404-1(b)(2))

44. Published Price List • Published price lists--prices taken from a catalog, price list, schedule, or other verifiable and established record that is regularly maintained by a manufacturer or vendor and is published or otherwise available for customer inspection (from the firm submitting the offer and/or published pricing information from other firms offering similar products). • Market prices--prices established in the course of ordinary and usual trade between buyers and sellers free to bargain that can be substantiated from sources independent of the offeror. • Other Sources--an offeror might provide information on the prices charged commercial customers over a period of time; such a record would not qualify as a published price list or market price, but it would provide a good record of the firm's commercial pricing practices.

45. Independent Cost Estimate • When using an ICE to determine price reasonableness, get good answers to the following questions: • How was the estimate made? • What assumptions were made? • What information and tools were used? • Where was the information obtained? • How did previous estimates compare with prices paid?

46. Market Research • Considerations: • Request for Information • Market Surveys from Reputable Third Parties • Independent Research • Price Indexes

47. Cost Analysis Techniques (FAR 15.404-1(c)) • Verification of cost data or pricing data and evaluation of cost elements • Evaluating the effect of the offeror’s current practices on future costs • Comparison of cost proposed with: • Actual costs incurred by offeror • Previous cost estimates from the offeror or other offerors • Other cost estimates received from other offerors • Independent cost estimates • Analysis of make-buy programs re: subcontract costs • Verification that proposed costs are IAW FAR Part 31 and Subpart E cost principles • Verification that cost or pricing data is current, accurate, and complete