Procurement and Contract Administration SMART 3.0 Training October 15, 2019 Todays Speakers Chanel Castaneda Tom DiLisio Senior Accountant, DFMAS Grants Management Specialist U.S. Department of Labor OGM/DPRR U.S. Department of Labor Region 6 San Francisco, CA Chicago, IL [email protected][email protected]
2 SMART 3.0 Training Strategies S Strategies Monitoring M Accountability A Risk Mitigation R T Transparency SMART 3.0 Training Series: The training modules are focused on: Strategies for sound grant management that
includes: Monitoring, Accountability, Risk mitigation and Transparency These four themes are weaved throughout the OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards also known as the Uniform Guidance ( 2 CFR Part 200 and 2 CFR Part 2900). 3 Grant Management Toolbox 4 Module Overview Laws, Rules, and Guidance Applicability of Procurement Standards
General Procurement Standards Conflict of Interest Procurement Methods Procurement Process - 5 Phases Contract Elements 5 Law, Regulations & Guidance Uniform Guidance Procurement Standards 2 CFR 200.317-200.326 Workforce Innovation and Opportunity Act WIOA Sec. 121(d) and 183 (a)(3)
20 CFR 683.200(c)(4) and 20 CFR 678.600-635 Competitive Selection of One-Stop Operators TEGL TEGL No. 15-16 FAQs Uniform Guidance FAQs WIOA One-Stop Operator Competition FAQs 6 Applicability of Procurement Standards Applicability to grants and cooperative agreements Contractor vs. subrecipient State vs. other non-Federal entities
Profit provisions 7 Applicability All portions of guidance apply to grants and cooperative agreements Applies to non-Federal entities that receive a grant, an agreement, or subaward States must follow the same polices and procedures it uses for procurements from its non-Federal funds 8 Contracts Contract Does not include subawards Legal instrument used to purchase property or services needed either to carry out
a project, program or for the entities own use and consumption. Contractor Entity that receives a contract Replaces the term vendor 9 Subawards Subaward - Award provided by a pass-through entity (a non-Federal entity that provides a subaward to a subrecipient to carry out part of a Federal program) to a subrecipient
Subrecipient Non-Federal entity that receives a subaward from a pass-through entity to carry out part of a Federal program 10 Subrecipient vs. Contractor Subrecipient Determines who is eligible to receive what Federal assistance Performance is measured by whether objectives of Federal program are met Has responsibility for programmatic decision making
Responsible for adhering to applicable Federal program requirements Uses Federal funds to carry out a program for a public purpose Funded by a subaward Contractor Provides similar goods or services to many different purchasers Provides the goods and services within normal business operations Provides goods or services that are ancillary to the operation of the Federal program Not subject to the compliance requirements of the Federal program Provides goods and services for the non-Federal entitys own use, creating a procurement
relationship Funded by a procurement contract 11 Selection of Subrecipients What guides the selection of subrecipients when a competitive procurement process is not required? Internal Controls System 2 CFR 200.303 Written procedures Conflict of interest provisions Service providers track record 2 CFR 200.331(b)
ETA recommends using a competitive procurement process when feasible Past record of performance Cost principles: reasonable costs Past record of compliance Audit and monitoring results Non-Federal entities must have a written method for conducting technical evaluations of the proposals and for selecting recipients 2 CFR 200.320(d)(3) 12 Procurement for Property and Services Property
Supplies, equipment, building space, leases, Auditing services, consultation services, professional services, Curricula, and/or Intangible property IT services, training, temporary or HR staffing, and/or
Services Renovation or repairs of leased or owned real property 13 Applicability States must follow the same policies and procedures that it uses for procurement with non-Federal funds 20 CFR 678.605(b) and 2 CFR 200.317 Other non-Federal entities must adhere to Uniform Guidance Procurement Standards at 2 CFR 200.318-326 14
For-profit entities WIOA specifically allows for non-Federal entities to enter into contracts and subawards with for-profit entities, for example: One-stop operators Service providers Eligible training providers May earn a profit Fair and reasonable profit negotiated as separate item of cost 15 Profit Allowable? Uniform Guidance For all other programs, 2 CFR 200.400(g) prohibits earning and retaining profit on Federal financial assistance unless expressly authorized by the terms and conditions of the Federal award.
WIOA At 20 CFR 683.295 and programs authorized by WIOA under secs. 121(d), 122(a), and 134(b) allows awardees of Federal financial assistance, such as one-stop operators, service providers, or Eligible Training Providers, to earn profit. The pass-through entity must follow 2 CFR 200.323 to assess reasonableness. 16 For-Profit One-Stop Operators Entities selected and serving as one-stop operators are subrecipients of a Federal award and thus are required to follow the Uniform Guidance (2 CFR part 200) and DOLs exception (2 CFR part 2900)
In 20 CFR 683.295(a)(2), ETA requires for-profit entities that are onestop operators to follow 2 CFR 200.323 on earning and negotiating a profit. The entity conducting the competition must ensure that the entitys charges for profit are reasonable and fair. 17 Profit or Incentive Negotiate as a separate element from price When there is no price competition In all cases where cost analysis is performed Profit considerations
Complexity of work performed Risk borne by contractor Contractors investment CMG Indicator 2.d.4: Cost or Price Analysis Amount of subcontracting Quality of past performance Industry profit rate in surrounding area for similar work Federal Acquisition Regulations (FAR) suggests less than 10 percent
Department of Health and Human Services (HHS) limits profit to 8 percent 18 Profit or Incentive (cont.) Governmental Entities Awards with must be on a cost reimbursement basis, Profit is not allowable under those agreements. Non-profit organizations Revenue in excess of costs Must be treated as program income and used for allowable purposes under the award. May not be retained by the organization as profit. 19
Knowledge Check 1 Questions True or False? 1. All non-Federal entities must follow the UG procurement standards at 2 CFR 200.318-326. 20 Knowledge Check 1 Answers 1. All non-Federal entities must follow the UG procurement standards at 2CFR 200.318-326. False 21 General Procurement Standards
Written procurement policies and procedures Full and open competition Prohibitions Transparency and responsibilities Recordkeeping Special Conditions 22 General Procurement Standards Written Policies and Procedures Non-Federal entities are required to have the following written procurement policies and procedures in place. Contract administration system 2 CFR 200.318(b)
Including procedures to ensure that sufficient records are maintained A written code of conduct for employees engaged in the award and administration of contracts 2 CFR 200.318(c)(1-2) Procedures that avoid purchase of unnecessary or duplicate items, including analysis of lease versus purchase alternatives 2 CFR 200.318(d) A process that promotes the use of intergovernmental agreements 2 CFR 200.318(e) A process to ensure that purchases are made only to responsible contractors with the ability to perform successfully 23 General Procurement Standards Written Policies and Procedures (cont.) Documentation of each of the significant steps followed in making an award.
Mandatory disclosure of violations A settlement process whereby recipients and subrecipients are solely responsible for the settlement of all procurement actions, including those related to source evaluation, protests, claims, and disputes Protest procedures to handle disputes related to both award and administration of contracts Small, minority, womens, and labor surplus businesses: For procurement actions, the Uniform Guidance requires that all necessary affirmative steps be taken to assure that small, minority, womens, and labor surplus area businesses are used whenever possible 2 CFR 200.321 24 Small, Minority, Womens, Labor Surplus Area Businesses Must take all necessary affirmative steps to assure that small, minority, womens and labor surplus area firms are used whenever possible, to include: Placing qualified businesses on solicitation lists Soliciting them whenever they are potential sources
Dividing total requirements into smaller tasks or quantities when economically feasible Establishing delivery schedules to encourage their participation Using services of SBA and MBDA of Dept. of Commerce Requiring prime contractor to take these same steps 25 General Procurement Standards KEEP IN MIND Written Procurement and Purchasing Policies and Procedures must: Be sound, efficient, fair, and cost-effective Identify the different procurement methods Identify the phases or stages of a procurement process Outline history and recordkeeping requirements Define individuals with authority to initiate and approve actions Outline ethical practices 26
General Procurement Standards Full and Open Competition Restrictions Placing unreasonable requirements on firms in order for them to qualify to do business Requiring unnecessary experience and excessive bonding Noncompetitive pricing practices between firms or between affiliated companies Noncompetitive contracts to consultants that are on retainer contracts Organizational conflicts of interest Specifying only a brand name product instead of allowing an equal product Any arbitrary action in the procurement process 27 General Procurement Standards Full and Open Competition To the extent practicable, the non-Federal entity must distribute micropurchases equitably among qualified suppliers.
For small purchase procedures price or rate quotations must be obtained from an adequate number of qualified sources. Written procedures must allow for sufficient time for all phases of the procurement process to be carried out in a manner that does not unduly restrict competition. 28 General Procurement Standards Prohibited Restrictions Geographic preferences; Offerors and bidders may come from different zip codes and cities outside of the local area. However, one-stop operator services must be located in the local area in order to carry out its functions and responsibilities as an operator.
Outdated pre-qualified lists; Pre-qualified lists are a result of a competitive procurement process. Review and updates to this list must be done frequently. Noncompetitive pricing practices; Non-Federal entities cannot issue an RFP or IFB with no, or zero, funds 29 General Procurement Standards Transparency and Responsibility Sunshine Provisions Requirement to make all information available to the public, auditors, and Federal reviewers. WIOA secs. 107(e) and 101(g) Responsible Entities
Awards must be made only to responsible entities that possess the ability to successfully perform under the terms and conditions of the proposed procurement. Consideration must be given to the entitys integrity, compliance with public policy, record of past performance, and financial and technical resources. 2 CFR 200.318(h) Entities must not be debarred, suspended, or otherwise excluded from or made ineligible for participation in Federal assistance programs or activities. 2 CFR 200.213 30 General Procurement Standards Recordkeeping Documentation must be retained for all phases of the competitive procurement process. The Uniform Guidance at 2 CFR 200.318(i) requires the maintenance of records sufficient to detail the history of procurement.
In the case of the one-stop operator, WIOA regulations at 20 CFR 678.605(d) require entities conducting the competition to prepare written documentation explaining the determination concerning the nature of the competitive process followed in the selection of the one-stop operator Local or State Boards have to document carefully the decision to select or not select a proposal. 31 General Procurement Standards Recordkeeping (cont.) Documentation is key to ensure that the procurement process is transparent and objective. Standards for documentation are high if the procurement results in a sole source selection.
Procurement history file should contain, at a minimum: All proposals/ bids received Ratings of those proposals Rationale for the method of procurement Selection of agreement or contract type Selection or rejection of proposals/bids Appeals and disputes And the basis for the contract price 32 Special Considerations Applicable to WIOA Procurements and Agreements General Requirements The local workforce investment plan must contain a description of the competitive process used to award grants and contracts under all programs funded under WIOA title I. The procurement requirements addressed in this presentation do not
apply to the identification of Eligible Training Providers. 33 Special Considerations Applicable to WIOA Procurements and Agreements (cont.) WIOA Youth Service Providers ETA encourages the use of competitive procurement processes when selecting WIOA Youth Service providers. One-Stop Operators Local WDBs are required by WIOA to use a competitive process for the selection of one-stop operators for the system. Local WDBs must support continuous improvement through the evaluation of onestop operator performance. Re-competition of operations every four years.
In situations in which the outcome of the competitive selection process is the selection of the Local WDB itself as the one-stop operator, the Governor and CEO must approve the selection. 34 Knowledge Check 2 Questions True or False? 1. Non-Federal entities may award sole-source contracts to consultants that are on retainer contracts. 35 Knowledge Check 2 Answers 1. Non-Federal entities may award sole-source contracts to consultants that are on retainer contracts. False
36 Conflict of Interest Conflict of Interest WIOA Conflict of Interest Uniform Guidance 37 Conflict of Interest - WIOA 20 CFR 683.200(c)(5) In addition to the requirements at 2 CFR 200.318 which address codes of conduct
and conflict of interest the following applies: (i) A State WDB member, Local WDB member, or WDB standing committee member must neither cast a vote on, nor participate in any decision-making capacity, on the provision of services by such member (or any organization which that member directly represents), nor on any matter which would provide any direct financial benefit to that member of that members immediate family. 38 Conflict of Interest WIOA (cont.) 20 CFR 683.200 (c)(5) ii) Neither membership on the State WDB, the Local WDB, or a WDB standing committee, nor the receipt of WIOA funds to provide training and related services, by itself, violates these conflict of interest provisions. (iii) In accordance with the requirements of 2 CFR 200.112, recipients of Federal awards must disclose in writing any potential conflict of interest
to the Department. Subrecipients must disclose in writing any potential conflict of interest to the recipient of grant funds. 39 Conflict of Interest Uniform Guidance Written standards of conduct to: Address conflict of interest, and Governing the performance of its employees engaged in the selection, award and administration of contracts 2 CFR 200.318 40 Conflict of Interest Uniform Guidance (2 Types) First type: No employee, officer, or agent must participate in the selection, award, or administration of a contract supported by a Federal award if he or
she has a real or apparent conflict of interest. Second type: Organizational conflict of interest 2 CFR 200.318(c)(2) Occurs because of relationships with a parent company, affiliate, or subsidiary organization, the non-Federal entity is unable or appears to be unable to be impartial in conducting a procurement action involving a related organization If the non-Federal entity has a parent, affiliate, or subsidiary organization that is not a state, local government, or Indian tribe, the non- Federal entity must maintain written standards of conduct covering organizational conflicts of interest. 41 Conflict of Interest Uniform Guidance (Competition) Contractors that develop or draft specifications, requirements, statements of work, and invitations for bids or requests for proposals must be excluded from competing for such procurements 2 CFR 200.319
42 Procurement Methods Micro-Purchase Small Purchase Sealed Bids
Competitive Proposals Noncompetitive Proposals 43 Methods of Procurement Overview 2 CFR 200.320 Methods of procurement to be followed Micro-purchase (< $10,000 effective Oct. 1, 2018) Small Purchase procedures (purchases between $10* and $250k* effective Oct. 1, 2018) Sealed bids (<$250k) Competitive Proposals (requests for proposals) and Sealed Bids (formal advertising such as IFBs) Non-Competitive Proposals (Sole Source) Professional or Qualifications Based Services *Subject to change. Thresholds are set by the Federal Acquisition Regulations (FAR) at 48 CFR Subpart 2.1 and 41 U.S.C 1908
** note that the threshold for micro-purchase and Simplified Acquisition thresholds have been updated, refer to link of ETA memo indicating this change. 44 Micro-Purchases Acquisition of supplies or services not exceeding $10,000 (adjusted for inflation - see Federal Acquisition Regulation at 48 CFR Subpart 2.1) in the aggregate. May be awarded without soliciting competitive quotations if price is reasonable.
Distribute equitably among qualified suppliers to extent practicable. 45 Small Purchases Informal procurement methods for securing services, supplies or other property. Cost is less than the Simplified Acquisition Threshold (SAT) Adjusted for inflation at FAR at 48 CFR 2.1 Currently $250,000 (increased from $150,000)
Price or rate quotations must be obtained from an adequate number of qualified sources. 46 Sealed Bids Sealed Bids (formal advertising) Bids publicly solicited. Firm fixed price contract is awarded.
Successful bid conforms to all material terms and conditions of the invitation for bids And is lowest in price Preferred method for procuring construction. 47 Competitive Proposals Requirements Publicize Request for Proposals (RFPs) and identify all evaluation factors
Solicit from an adequate number of qualified sources Written method for evaluating and selecting proposals Contract awarded to responsible firm Whose proposal is most advantageous Price and other factors considered 48
Non-Competitive Proposals Sole-Source Selection: Non-federal entities may select a contractor through sole source selection if one or more of the following conditions apply 2 CFR 200.320(f): The item or service is available only from a single source Public exigency or emergency The Federal awarding agency expressly authorizes noncompetitive proposals in response to a written request After solicitation of a number of sources, competition is determined inadequate 49 Knowledge Check 3 Questions True or False?
1. The Simplified Acquisition Threshold for small purchase is between $10,001 and $150,000. 50 Knowledge Check 3 Answers 1. The Simplified Acquisition Threshold for small purchase is between $10,001 and $150,000. False 51 Competitive Procurement Process Phases Planning Phase
Release and Evaluation Phase Negotiation and Selection Phase Implementation Phase Closeout Phase 52 Phase 1: Planning
Identify need and specify all parameters to be negotiated Conduct market research Establish parameters for timeframes and monies
Identify procurement method Develop requirement s Develop procurement solicitation (e.g., RFP or IFB) Develop factors for
evaluation/ scoring Identify panel and signatory authority 53 Phase 2: Release and Evaluation Publicize procurement solicitation Prepare
proposals/bid s Host bidders conference Collect Proposals/Bid s Score or evaluate proposals 54 Phase 3: Negotiation and Selection
Negotiate performanc e levels Negotiate fair and reasonable profit, if applicable Negotiate payment details and frequency Negotiate
duration of contract, MOU or agreement and modification process Obtain applicable authorized approval Make offer and obtain acceptance
Execute contract, agreement, or MOU* 55 Phase 4: Implementation Conduct oversight and monitoring Use of monitoring tool/guide Contract administration Ensure timely invoices and payments
Ensure contractors submit invoice timely to ensure accurate financial reporting Establish procedures to pay invoices timely to take advantage of any discounts for timely payment Monitor performance in accordance with performance and service deliverables Evaluate and approve contract or MOU modifications
56 Phase 5: Closeout Reconcile costs and payments Includes advances Reconcile performance goals with actual performance Ensure participant and financial records are secured and retained
Safeguard personally identifiable information (PII) Record retention requirements apply Prepare closeout documents 57 Additional Elements A contract should be well organized and easily understood and should include: Essential terms and conditions required by Federal and
State/local statutes Schedule/timetable of deliverables Statement of Work (SOW) Specific period of performance Payment terms Written contract (signed by both parties) 58
Essential Terms and Conditions Either required by the State, local area, or the Federal agency as National, State, or local policy requirements Identify that the other party is a subrecipient of Federal funds Include terms that adhere to requirements found in: WIOA Uniform Guidance 2 CFR part 200 OMBs approved exceptions for DOL 2 CFR part 2900 Grant terms and conditions 59 ETA and Uniform Guidance Resources Core Monitoring Guide
Objective 2.d Procurement and Contract Administration Grant & Financial Management Technical A ssistance Guide Chapter 6: Procurement, Contracts, and Leases TEGL 15-16: Competitive Selection of One-S top Operators Department of Labor Exceptions 2 CFR Part 2900 Uniform Administrative Requirements, Cost Principles, and
20 CFR 683.200 60 Web Resources What is the best way to find your local American Job Center (AJC)? See DOLs Service Locator
Want More Information? Want More Training? DOLETA.gov/Grants Funding Opportunities How to Apply Manage Your Awarded Grant Resources and Information ETA Grantee Handbook Annual Grant Terms Template Core Monitoring Guide Technical Assistance Guides Uniform Guidance Quick Reference Sheet Workforce GPSs
Grants Application and Management Com munity of Practice Financial Reporting Subrecipient Management and Oversight Indirect Cost Rates Policies and Procedures Procurement and Performance-Based Contracts Capital Assets and More
WorkforceGPS 61 Remember the Grant Management Toolbox! 62 Questions? 63 Thank you. This presentation was developed using Federal funds for training
purposes and cannot be used by third parties to earn money or fees. 64
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