PROCUREMENT How To Do It Right

Transcription

PROCUREMENT
How To Do It Right
Peggy Nagel - Project Director for Financial and
Administrative Management Grant
ICAA Training Conference
Des Moines Iowa June 26 - June 28 2012
© 2012 Community Action Program Legal Services, Inc.
Agenda
• Difference between Procurement and Subgrant
• Understanding guiding principles of Federal procurement
regulations.
• Specific OMB A-110 and A-122 requirements
• Creating a policy
• Implementing the policy
• Sample Policies, procedures and forms
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Subgrantee (OMB A-133)(.210)
• Determines who is eligible to participate in program;
• Performance measured against whether program
objectives of the federal program met;
• Responsible for programmatic decision making;
• Responsible for complying with program requirements;
and
• Uses funds to carry out a program as compared to
providing goods or services for a program.
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Vendor (OMB A-133)(.210)
• Provides the goods and services within normal business
operations;
• Provides similar goods or services to many different
purchasers;
• Operates in a competitive environment;
• Provides goods or services that are ancillary to the
operation of the federal program; and
• Is not subject to compliance requirements of the federal
program.
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Procurement Rules Applicable to
CAAs
Requirements
• Office of Management and Budget (“OMB”) Circular A110 codified as 2 CFR 215.40 – 48 applicable to all
direct federal grants, and may be applicable to CSBG
• OMB Circular A-122, codified as 2 CFR Part 230
• Program specific requirements such as 45 CFR 74.40 48 (Head Start)
• State and other contractual requirements
Federal grantees are not subject to Federal
Acquisition Regulation (FAR), but may use for
guidance
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OMB Circular A-110
• Standards for Federal agencies in administration
of direct grants and cooperative agreements
with universities, hospitals, and non-profit
organizations
• Applicable to all Federal agencies
• If any federal statute specifically prescribes
policies or requirements that differ from A-110,
the provisions of the statute govern
2CFR 215.43
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Guiding principles for all Federal
procurement rules
Competition:
All procurement transactions shall be conducted in
a manner to provide, to the maximum extent
practical, open and free competition.
Cost and Price analysis:
Ensure that grantee receives best value, price and
quality
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Guiding Principles
Most rules in OMB A-110 and A-122 derive from these
basic concepts
• All procurement transactions shall be conducted in a
manner to provide, to the maximum extent practical,
open and free competition.
• A reasonable cost and good value must be obtained
• Some form of cost or price analysis shall be made and
documented in connection with every procurement
action.
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Practical Steps to ensure open
competition and good value?
To understand how to convert these concept into
practical policies and procedures, it is helpful to
go step by step through both:
• An ideal procurement scenario
• A typical real word scenario
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Ideal Procurement Scenario
A CAA facilities manager is charged with maintaining and
replacing equipment.
She reviews maintenance and equipment records and finds
that the building's hot water heater is scheduled for
replacement at the end of the year.
She begins to plan how to procure a new hot water heater
so as to ensure open competition and get the CAA the best
value for the money
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Steps to the perfect procurement
• Do research on heaters, collect information, check out
reviews from experts and finally narrow your choices to 2
or 3 top options.
• Check prices on your top picks with several vendors and
determine who would provide the best price, warranty,
and service.
• Weighing all factors, ask for price quotes from at least 3
vendors
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Next steps to the perfect procurement
• Do a cost analysis using a matrix to weigh the various
benefits in service, quality and installation for each
vendor against the price of each vendor.
• Select the vendor whose product and service would give
your CAA (and by extension the Federal government)
"the best bang for the buck."
• Document :
–
–
–
–
Needs and requirements
Information you gathered about quality and service
Standards used for the final cost analysis
final approval of the purchase of the product by the responsible
manager
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Real World Procurement
Procurement often takes place on the
fly, either because funds are suddenly
available for a long planned purchase
or a sudden unplanned need arises
and decisions need to be made quickly
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Typical Real World Procurement
Scenario
• You have no intention of buying a new water
heater until suddenly it springs a leak, and
begins to flood the basement.
• You realize you have no water pressure and
need to replace the heater immediately
• You call the only plumber you know and ask him
to deliver what ever he has on hand ASAP.
• You pay whatever is takes to have the water
heater replaced and installed in a timely manner
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Next steps in a typical procurement
The crisis is averted the new water heater installed
and then :
• You wonder whether you have followed the
procurement policy.
• You consult with your procurement staff to
figure out how to make the purchase you have
already completed be compliant with your
procurement policy.
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The best way to avoid the typical
procurement scenario?
• Have in place a practical, clearly written policy
• Put into place simple processes, forms and procedure to
implement the policy
• Educate your employees about the policy and
procedures required to successfully implement that
policy.
• Consistently follow those procedures
• Document the procurement to demonstrate that
procedures were followed
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How to create an effective and
compliant procurement policy ?
Follow the rules set out in A-110
Adopt written procurement procedures that
includes at least the following provisions:
• Avoid purchasing unnecessary items.
• Where appropriate, do an analysis of lease versus
purchase options.
• Solicitations must include certain required provisions
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Solicitations must include:
• Clear and accurate description of goods or
services being solicited
• Requirements that vendor must fulfill
• Description of factors to be used in evaluating
bids or proposals
• Description, whenever practicable, of
requirements in terms of functions to be
performed and minimum acceptable standards
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Solicitations must include (cont’d):
• Specific features of “brand name or equal” descriptions
• Acceptance, when possible, of products and services
dimensioned in the metric system of measurement.
• Preference, when possible, for products and services
that conserve natural resources, protect environment
and are energy efficient.
• “Cost-plus-a-percentage-of-cost” or “percentage of
construction cost” methods of contracting shall not be
used.
2CFR 215.44 (a) (3)
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Small, minority and women-owned
businesses
Positive efforts shall be made to utilize
small businesses, minority-owned firms,
and women's business enterprises,
whenever possible.
2CFR 215.44 (a)(3) (B)
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Employee Code of Conduct
No CAA officer, employee, and/or agent will participate in
the selection, award, and/or administration of any contract
for equipment, materials, and supplies or consulting,
professional services if a real or apparent conflict of interest
would be involved. Such a conflict will arise when:
a. the employee, officer, or agent;
b. any member of his/her immediate family;
c. his/her partner; or
d. an organization which employs or is about to employ,
any of the above
e. has a financial or other interest in the firm or individual
selected for award.
2CFR 215.42
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Code of Conduct- Gratuities
• The officers, employees, and agents of the recipient
shall neither solicit nor accept gratuities, favors, or
anything of monetary value from contractors, or parties
to subagreements.
• However, recipients may set standards for situations in
which the financial interest is not substantial or the gift is
an unsolicited item of nominal value.
• The standards of conduct shall provide for disciplinary
actions to be applied for violations of such standards by
officers, employees, or agents of the recipient.
2CFR 215.42
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Vendor or Contractor Qualifications
• Contracts shall be made only with responsible
contractors who possess the potential ability to perform
successfully under the terms and conditions of the
proposed procurement.
• Consideration shall be given to such matters as
contractor integrity, record of past performance, financial
and technical resources or accessibility to other
necessary resources.
• In certain circumstances, contracts with certain parties
are restricted by agencies' implementation of E.O.s
12549 and 12689, “Debarment and Suspension.”
2CFR 215.44 (c)-(d)
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Creating your policy
Issues to consider
• Who does the purchasing in your organization?
Is procurement a centralized function or does it place
throughout the organization?
• Who approves the purchases?
Program manager, a fiscal officer
• What is your current process for approving the
purchase of goods and services?
Purchase Orders, Purchasing Cards, contracts
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More Issues to Consider
• What are the dollar thresholds in your organization that
should trigger additional review and approval?
Below 5K, above 25K above 100K?
• What are the standards for a PO vs. Contract?
Dollar threshold, complexity, type of service?
• Who reviews and approves contracts?
Executive Director, Board member?
• Who will ensure that procedures are consistently
followed and documentation is complete and available to
auditors/ monitors?
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Simplified Acquisition Procedures:
Potential Approach to Micro-Purchases
• Up to $3,000 (“micro-purchase threshold”): no
requirement to solicit competitive quotations if price is
considered reasonable
• Need to verify price only if suspect that price is
unreasonable or if purchasing a supply or service for
which no comparable pricing information is available
FAR 2.101
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Simplified Acquisition Procedures
• Apply to purchases of $100,000 or less – sealed bidding
or negotiated procedures specified in Federal Acquisition
Regulation (FAR) used for acquisitions over $100,000
• Thresholds adjusted periodically – review contracts
carefully for additional requirements
• States may require lower thresholds and/or additional
procedures
FAR 2.101
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Policy and Procedures are not the
same thing
Important to distinguish between procurement policy and
procedures.
• Policy is guiding principle used to set direction
Used as guide to decision making under given set of circumstances.
• Procedures are steps or processes put into
place to ensure that policies are implemented.
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Policy and Procedures (cont’d)
Why separate policy document from
procedures?
• Policy needs to be approved by Board.
• Procedures need to be updated and revised
frequently to keep up with changes in
organization
• Well thought-out procurement policy should not
need to be frequently changed.
• Only revisions to policy will need to be reviewed
by Board.
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Procurement Challenges: Sole Source
Procurements
What is a sole source procurement?
Sole source is a non-competitive purchase or procurement
process accomplished after soliciting and negotiating with
only one source, so-called sole source, thus limiting full and
open competition
Why is it a challenge?
•Difficult to justify
•Documenting reasons
•Still must show cost/price analysis
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Sole Source challenges
Reasons listed in the FAR to justify sole source.
• Only one responsible source and no other supplies or
services will satisfy agency requirements
• Unusual and compelling urgency.
• Industrial mobilization; engineering, developmental, or
research capability; or expert services
• International agreement
• 6.302-5 Authorized or required by statute
• 6.302-6 National security
• 6.302-7 Public Interest
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Common Sole Source Procurements
• Professional Services- Consultants
• Specialized services performed by subject matter
experts.
• Last minute or emergency
• Limited market procurements
•
Limited pool of qualified vendors
• Specialized technical equipment, infrastructure
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Sole Source Challenges - Documenting
Important things to document
• Reason for not competing the procurement
• Logically demonstrate (possibly in narrative format) to
outside observer that non- competitive procurement was
required.
• Cost analysis
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Procuring Professional Services
Federal grant funds may be used to pay costs of
professional and consultant services provided by
persons who are members of a particular profession or
possess a special skill
•
– Professional service providers may not be CAA officers or
employees
• Costs must be reasonable in relation to services and
not contingent upon recovery from government
• In determining allowability of costs, look at a number
of factors
2 CFR Part 230, App. B, pgh. 37 (OMB A-122)
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Professional Services Costs, cont.
• In determining allowability, certain factors are relevant under
OMB Circular A-122:
a. Nature and scope of service in relation to service required.
b. Necessity of contracting for service vs. organization’s own capability.
c. Past patterns of costs, particularly in years before federal award.
d. Impact of government awards.
e. Does proportion of government work to total organization work justify
incurring cost?
f. Can service be performed more economically by hiring employee?
g. Qualifications of individual performing service and customary fees.
h. Adequacy of contractual agreement.
• Retainer fees must be supported by evidence of services
available or provided.
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Procuring Professional Services
Things to remember
• Contracts with consultants or independent contractors
are subject to fair and open competition.
• Consultants or independent contractors are subject to
price and/or cost analysis.
• A clear and accurate description of the scope of work for
the service must be provided
• The scope of work shall not be designed to limit
competitive solicitation from multiple vendors.
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Prequalifying Vendor and Consultants
A Prequalified Vendor list streamlines the procurement
process for contracting with service providers while
maintaining compliance
How to Prequalify
1. Create a general scope of work and a request for quote
specific to a certain category of service.
2. Send RFQ to all vendors that might qualify in that
category.
3. Require vendors submit standard prices in specified
formats. Request that prices be fixed for a specified time
frame
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Prequalifying Vendor and Consultants
• Require that all vendors accept the same standard terms
and conditions.
• Ask for references and verification of that non on the
principal have been disbarred.
Review Bids
• Compare all bids for adherence to scope of work
• Compare Price Analysis
• Accept all competitive bids from qualified Vendors
Create List
• Make list available to all buyers
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Why it Matters
Funds can be disallowed:
Beaver County Head Start, DAB Decision No. 2441 Feb 14, 2012
– ACF disallowed $19,000 claimed for building management
contract due to violation of open competition rules.
– Head Start program declined to compete contract because it
already had a financial obligation to developer who was awarded
contract.
– DAB found that this did not relive the program of its obligation to
“open and free competition” in procurement of services
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Why it Matters
• One of most common deficiencies cited in audits
• Get the best value for CAAs funds
• Be efficient and stay compliant
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Final Thoughts
Just creating a written procurement policy and
having it approved by the Board and
disseminated is not enough.
Process and procedure must ensure:
• Consistent adherence to policy
• Ability to document and monitor procurement process
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Peggy Nagel
Project Director,
Nonprofit Financial and
Grants Management Training Program
CAPLAW
178 Tremont Street
Boston, MA 02111
617-348-6466
peggy.nagel@caplaw.org
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PROCUREMENT How To Do It Right

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