Procurement Policies for Nonprofits

Blog
February 2, 2018

As of January 1, 2018, nonprofit organizations must be in compliance with the new procurement regulations. If you haven’t done so already, now is the time to review your procurement policies and procedures. The new regulations are effective for all nonprofits with federal grants and cost-plus contracts that fall under Uniform Guidance.

You may be aware that the regulations over procurement for nonprofits changed when Uniform Guidance came into effect. However, due to the amount of effort the additional documentation was going to take, the effective date was pushed back twice so that nonprofits could take more time getting in compliance. Finally, the effective date has quickly approached and was put into effect on the first of the year.

There are several key components to look for when reviewing your organization’s procurement policies in accordance with 2 CFR Section 200.318 General Procurement Standards. They include:

  • Formalize the procurement policy in writing.
  • Address the “micro-purchase” threshold (currently $3,500 as governed by the FAR 48 CFR Subpart 2.101 UNLESS the entity is an Institution of Higher Education or related affiliate OR a nonprofit research organization and then the micro-purchase threshold is $10,000, as determined by the National Defense Authorization Act (NDAA) ).
  • Identify any purchases above the micro-purchase threshold but beneath the simplified acquisition threshold of $150,000. Purchases in this range ($3,500-$150,000) must have some form of rate/price analysis from an adequate number of qualified sources documented. These purchases are considered simple and informal. They require a lower threshold of competition and do not require formal solicitation procedures. The procurement should address how this will be documented.
  • Identify anything above the $150,000 threshold and follow a formalized solicitation and bid process.
  • Document justification of the method if Sole Source procurement is used.

Records must be maintained in sufficient detail to show the history of vendor or contract procurement including the justification of the need for the work to be done. A table can be used to compare different vendors in terms of cost, skills, and features. Make sure to note any specialized skills or knowledge and past experience. Consideration should be given to such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources.

Other points the procurement policy should address:

  • Acquisition of duplicative or unnecessary items.
  • Do not specify brand-name only products unless absolutely necessary.
  • All necessary affirmatives steps must be taken to assure that minority businesses and women’s business enterprises (MBE/WBE) are used when possible.
  • Any organizational conflicts of interest and take the necessary steps to address any conflicts.

Your auditors will be testing for this documentation starting with calendar years ending December 31, 2018 or fiscal years ending 2019, however you should be reviewing your policies and procedures to check for compliance now. For more questions regarding the new procurement policies for nonprofits, please contact our Uniform Guidance experts at 301.231.6200.