5 Methods For Procurement Success

Time's Up | Procurement Methods | UGG | Ohio CPA Firm
Thanks to the U.S. Office of Management and Budget (OMB), government entities were given two full fiscal years to review their policies and procedures to make sure they were in line with the new procurement guidelines; but now time has run out. Read on to learn more.

Back in December of 2014, Uniform Grant Guidance (UGG) was put into place to help govern new awards and/or incremental funding increases for government entities. In an attempt to get their affairs in order with regard to UGG’s procurement requirement, most entities opted to take advantage of the two-year grace period.

Thanks to the U.S. Office of Management and Budget (OMB), government entities were given two full fiscal years to review their policies and procedures to make sure they were in line with the new procurement guidelines; but now time has run out. As of Jan. 1, 2017, entities with fiscal years ending Dec. 31, are required to be in compliance with the new procurement methods. Entities with fiscal years ending June 30, must be in compliance as of July 1, 2017.

Read Also: Uniform Grant Guidance: What All Government Entities Need To Know

Get to know the following five methods for federal procurement:

Five Methods To Follow For Successful Federal Procurement Efforts

Procurement by
Micro Purchase

Aggregate dollar amount not to exceed $3,500. Entity must attempt to distribute purchases equitably among qualified suppliers.

Procurement by
Small Purchase

Aggregate dollar amount between $3,500 and the Simplified Acquisition Threshold (SAT) of $150,000. The entity must obtain and document price or rate quotations from an adequate number of qualified sources. However, price/cost analysis is not required prior to obtaining such quotes.

Procurement by
Sealed Bids

Purchases greater than $150,000 that lends itself to a firm fixed price contract and selection of the successful bidder can be made principally on the basis of price. (i.e. construction type contracts)

Procurement by
Competitive Proposals

Purchases greater than $150,000 that do not meet the requirements for sealed bid purchases. This is similar to the request for proposal (RFP) process many entities are already familiar with. Proposals must be solicited from an adequate number of sources and the entity must have a WRITTEN method for evaluating the proposals.

Procurement by Noncompetitive Proposal

This method is only used if:

  1. The item is only available from a single source.
  2. The public need or emergency for the requirement will not allow for competitive solicitation.
  3. The federal awarding agency or pass-through entity expressly authorizes.
  4. After solicitation of a number of sources, competition is determined inadequate (i.e. limited proposals received under the competitive RFP process).

With this method we would caution entities to be sure to have all necessary documentation needed to support the noncompetitive proposal process. In other words, entities should expect this method and supporting documentation to be scrutinized during the audit process.


Common Pitfalls To Avoid

The new guidelines are not without their own shortcomings, which is why you should take steps to avoid running into some significant audit issues. Here are a few tips to help you along with some insight into which items auditors and federal reviewers will be asking to see.

  • Communication – Your entity may consist of several departments, each with their own policies and procedures. To ensure that the entire organization is in compliance of the new guidelines, ongoing interdepartmental communication is essential and procurement method compliance should become a central priority.
  • Documentation – Maintaining proper documentation of the procurement methods you use and how/why each vendor was selected will help remove any doubt of questionable activity. For example, even though you are following the procurement method applicable by the small purchase requirements, you are actively maintaining documentation of quotes received – including any written support you can provide for quotes obtained verbally. To move forward with the procurement method necessary for competitive proposals, your entity must be able to produce a up-to-date score card sheet and a procedural document that outlines how the proposal is scored.

So what are the common pitfalls you may run into that may cause significant audit issues?  Your entity may have departments that may have their own policies.  Communication with these departments to ensure they are following these procurement methods will be essential.  Maintaining documentation of the procurement method used and how the vendor was selected.  For example you may be following the procurement by small purchase requirements but are you maintaining documentation of the quotes that you received (including written support for quotes that may have been obtained verbally).  For the procurement by competitive proposal do you have a proposal score sheet that is maintained and document the procedure for how the proposal was scored?

Don’t take the chance of losing your federal funding. Make sure your procurement methods comply with new guidance to avoid any issues moving forward. Email the government services team at Rea & Associates for help.

By Chad Gorfido, CPA (Medina office)

Chad has earned his AICPA Advanced Single Audit Certificate from the AICPA’s Governmental Audit Quality Center. This certification speaks to Chad’s ability to plan, direct and report on single audits in compliance with Uniform Guidance.

For more insight to help your government entity through the procurement process, check out these articles:

Who You Contract With Matters

New Auditor Of State Requirements Will Affect You