Non-Profit Organizations – Is Your Procurement Policy Meeting Compliance Standards?
Procurement and the purchasing process are much more than just having a policy in place for nonprofits. It is the necessary selection of vendors that will partner with your organization, establishing payment terms that fit your budget, negotiating contracts that make sense now and for the future, and ultimately purchasing the goods or services you need to fulfill your mission.
Procurement standards under Uniform Guidance are applicable to federal awards and contracts where government dollars are being used to obtain goods or services. It is important to review the procurement section of the Uniform Guidance in detail to ensure you comply.
Some of the main provisions are as follows:
- Non-federal entities receiving federal awards must have documented procurement procedures which take into consideration applicable federal, state, and local laws and regulations.
- Policy should include economic considerations and entities must avoid using federal funds for unnecessary items.
- Written conflict of interest policies is required. An employee with actual or apparent conflicts would not be able to participate in the selection of a vendor with federal grant dollars. There should also be an organizational conflict of interest policy if a non-federal entity has a parent, affiliate, or subsidiary organization.
- Uniform Guidance encourages and promotes the use of shared services where appropriate to be cost effective.
There are five methods of procurement as outlined in Uniform Guidance:
- Micro-purchase: If the dollar amount is below $3,000, or below $2,000 if construction related and subject to David Bacon compliance requirements, competitive quotes are not required.
- Small purchase: If the dollar amount exceeds the micro-purchase amount but is less than the Simplified Acquisition Threshold of $150,000, informal purchasing procedures are acceptable, but price quotes must still be obtained.
- Sealed bids: If the purchase is more than the Simplified Acquisition Threshold of $150,000, a formal solicitation is required and the purchase would be awarded to the responsible bidder who meets all the required criteria, has the required experience, and is the lowest price.
- Competitive proposals: If the purchase is more than the Simplified Acquisition Threshold of $150,000, this method would be used when sealed bids are not appropriate and there is a fixed price or cost reimbursement contract.
- Noncompetitive proposals: This is also called sole-source procurement and has specific criteria as to when it can be used, such as an item is only available from one source, a public emergency does not allow time for a full competitive proposal, or the competition is deemed inadequate.
If your organization has not done so already, now is the time to review your procurement policies and procedures to ensure you have all the required elements. For any assistance needed regarding the new procurement policies, please reach out to Sax’s Not-for-Profit advisors.
April Kushner is a Senior Manager at Sax and a member of the firm’s Not-for-Profit Practice. She specializes in accounting and auditing services for non-profit organizations, including internal control consulting, federal and state grant compliance, and single audit requirements and procedures. She can be reached at [email protected].