Hobart and William Smith Colleges

Federal Grant Purchasing Policy

When procuring property and services under a Federal grant, purchases funded by Federal grant funds must adhere to regulations found in the Uniform Guidance (UG) at 2 CFR Part 200. The UG Procurement Standards (§200.317 to §200.327) identify required procurement standards to be followed by the Colleges. This Federal Grant Purchasing Policy is designed to ensure that the Colleges comply with those standards, noting that individual Federal grants may contain further standards that are unique to those grants and in addition to the standards of this policy.

Purchases made with Federal funds are reviewed for compliance with the Federal Acquisition Regulation and the UG. The Colleges are required to retain back-up documentation, such as bids, quotes, and cost/price analyses on file for Federal auditors. These files will be maintained in the grant file by the Grants Manager in the Business Office in accordance with the Colleges record retention policy and any agency specific guidelines.

This policy only applies to contract procurement purchases as defined under UG §200.22 Contract. The UG does not require the Colleges to select subrecipients (see definition under UG §200.92 Subaward) competitively, however individual Federal agencies may impose this requirement in competitive announcements and/or programmatic terms and conditions.

Since the determination of Contract versus Subaward is a driving factor in determining the applicability of this policy, the assessment of which purchases fall under Contract versus Subaward is made at the pre-award stage.

General Procurement Standards (UG §200.318)
The Colleges:

• Must follow this Federal Grant Purchasing Policy to ensure that purchases conform to applicable Federal law and the standards identified in the UG;
• Must maintain oversight to ensure that contractors perform in accordance with the terms, conditions and specifications of their contracts or purchase orders;
• Must adhere to the following standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts paid with Federal grant funds:
• No employee, officer, or agent of the Colleges may 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. Such a conflict of interest exists when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract.
• The officers, employees, and agents of the Colleges may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts.
• If a conflict of interest arises after the procurement has been made, it must be disclosed immediately in accordance with the Colleges' "Conflicts of Interest Policy."
• Violations of such standards by officers, employees, or agents of the Colleges can result in disciplinary actions as determined by the Colleges.
• Must avoid acquisition of unnecessary or duplicative items;
• Must award contracts only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed purchase. Consideration should be given to such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources. The Principal Investigator with the assistance of the Business Office, must also verify that the contractor has not been debarred in accordance with 2 CFR Part 180;
• Must maintain records sufficient to detail the history of the purchase. These records will include, but are not necessarily limited to the following:
• Rationale for the method of procurement,
• Requests for proposal,
• Bids and price quotes received,
• Selection of contract type,
• Contractor selection or rejection and the basis for that selection or rejection,
• Justification for lack of competition when competitive bids or offers are not obtained, and
• The basis for the contract price and/or cost/price analyses.
• Must be responsible, in accordance with good administrative practice and sound business judgment, for the settlement of all contractual and administrative issues arising out of purchases.
• Must ensure that contracts and/or Purchase Orders contain the applicable provisions described in Appendix II to Part 200—Contract Provisions for non-Federal Entity Contracts Under Federal Awards.
• Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase.
• Where appropriate, should analyze lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach.
• Are encouraged to enter into state and local intergovernmental agreements or inter-entity agreements where appropriate for procurement or use of common or shared goods and services. Competition requirements will be met with documented procurement actions using strategic sourcing, shared services, and other similar procurement arrangements;
• Are encouraged to use Federal excess and surplus property in lieu of purchasing new equipment and property whenever such use is feasible and reduces project costs;
• Are encouraged to use value engineering clauses in contracts for construction projects of sufficient size to offer reasonable opportunities for cost reductions;
• For construction or facility improvement contracts or subcontracts exceeding the Simplified Acquisition Threshold (specified bleow), see UG §200.326 for bonding requirements.
• May use a time and materials type contract only after a determination that no other contract is suitable and if the contract includes a ceiling price that the contractor exceeds at its own risk. Whenever a time and materials type contract is used the Colleges must assert a high degree of oversight in order to obtain reasonable assurance that the contractor is using efficient methods and effective cost controls.

Competition (UG §200.319)
All purchases must be conducted in a manner providing full and open competition consistent with the standards of UG §200.319 and UG §200.320 (see below). In order to ensure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft specifications, requirements, statements of work, or invitations for bids or requests for proposals must be excluded from competing for such purchases. Some of the situations considered to be restrictive of competition include but are not limited to:

• 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;
• Specifying only a "brand name" product instead of allowing "an equal" product to be offered and describing the performance or other relevant requirements of the purchase; and
• Any arbitrary action in the purchasing process.

The Colleges must conduct purchasing activities in a manner that prohibits the use of statutorily or administratively imposed state or local geographical preferences in the evaluation of bids or proposals, except in those cases where applicable Federal statutes expressly mandate or encourage geographic preference.

The Colleges must ensure that all prequalified lists of persons, firms, or products which are used in acquiring goods and services are current and include enough qualified sources to ensure maximum open and free competition. Also the Colleges must not preclude potential bidders from qualifying during the solicitation period.

Noncompetitive procurements can only be awarded in accordance with noncompetitive proposals paragraph included below under Methods of Procurement to be Followed.

When obtaining solicitations related to purchases, the PI/PD must:

• Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be purchased.
• This description must not, for competitive purchases, contain features which unduly restrict competition.
• The description may include a statement of the qualitative nature of the material, product or service to be purchased and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use.
• Detailed product specifications should be avoided if at all possible.
• When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a "brand name or equivalent" description may be used as a way of defining the performance or other salient requirements of the purchase. The specific features of the named brand which must be met by offers must be clearly stated; and
• Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals.

Methods of Procurement to be Followed (UG §200.320)
The Colleges must use one of the following methods of procurement:

Informal Procurement Methods

• Micro-purchases (where the aggregate dollar amount does not exceed the micro-purchase threshold set by the Federal Acquisition Regulation at 48 CFR Subpart 2.1 (Definitions))
• The micro-purchase threshold is $10,000 except as otherwise discussed in Subpart 2.1 of the Federal Acquisition Regulation at 48 CFR, but this threshold is periodically adjusted for inflation, so the UG and the Federal Acquisition Regulation must be consulted for the most up to date threshold amount.
• To the extent practicable, the Colleges must distribute micro-purchases equitably among qualified suppliers.
• Micro-purchases may be awarded without soliciting competitive quotations if the Colleges consider the price to be reasonable based on research, experience, purchase history or other information and documentation. Documentation supporting the reasonableness of the price must be maintained. It may be maintained in the grant file maintained by the grants manager and/or in the Colleges' Accounts Payable records.
• Small purchase procedures (relatively simple and informal procurement methods for securing services, supplies, or other property that cost more than the micro-purchase threshold, but do not cost more than the Simplified Acquisition Threshold set by the Federal Acquisition Regulation at 48 CFR Subpart 2.1 (Definitions))
• The Simplified Acquisition Threshold is $250,000 except as otherwise discussed in Subpart 2.1 of the Federal Acquisition Regulation at 48 CFR, but this threshold is periodically adjusted for inflation, so the UG and the Federal Acquisition Regulation must be consulted for the most up to date threshold amount.
• If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (at a minimum, three).The price quotes must be documented and will be maintained in the grant file by the Grants Manager in the Business Office.
• Formal Procurement Methods - Purchases greater than the Simplified Acquisition Threshold:
• Sealed bids (formal advertising; bids are publicly solicited and a firm fixed price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price)
  
  • If this approach is to be used, see the UG for detailed guidance (UG §200.320).
• Competitive proposals (normally conducted with more than one source submitting an offer, and either a fixed price or cost-reimbursement type contract is awarded. It is generally used when conditions are not appropriate for the use of sealed bids)
  
  • If this approach is to be used, see the UG for detailed guidance(UG §200.320).

• Noncompetitive proposals (solicitation of a proposal from only one source)
  
  • This approach may only be used when one or more of the following circumstances apply:
    
    • The aggregate dollar amount of the property or services does not exceed the micro-purchase threshold (see micro-purchases above);
    • The item is only available from a single source;
    • The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation;
    • The Federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request from the Colleges; or
    • After solicitation of a number of sources, competition is determined inadequate.

The "cost plus a percentage of cost" and "percentage of construction cost" methods of contracting must not be used.

Contract Cost and Price (UG §200.324)
The Colleges must perform a price or cost analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold, including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the Colleges must make independent estimates before receiving bids or proposals. PIs/PDs should make an effort to use and verify Colleges' discounts, check market prices, review past purchase orders for similar items, and demonstrate other good business practices.

The Colleges must negotiate profit as a separate element of the price for each contract in which there is no price competition (see below for further discussion of noncompetitive proposals) and in all cases where cost analysis is performed. To establish a fair and reasonable profit, consideration must be given to the complexity of the work to be performed, the risk borne by the contractor, the contractor's investment, the amount of subcontracting, the quality of its record of past performance, and industry profit rates in the surrounding geographical area for similar work.

Costs or prices based on estimated costs for contracts under a Federal award are allowable only to the extent that costs incurred or cost estimates included in negotiated prices would be reasonable, allocable, and allowable for the Colleges under the cost principles contained within the UG.

Affirmative Action Guidelines (UG §200.321)
When purchasing property and services the Colleges must take all necessary affirmative steps to assure that minority businesses, women's business enterprises, and labor surplus area firms are used when possible (MWBE's). For purchases greater than the micro-purchase threshold, these affirmative steps must include:

• Placing qualified small and minority businesses and women's business enterprises on solicitation lists;
• Assuring that small and minority businesses, and women's business enterprises are solicited whenever they are potential sources;
• Dividing total requirements, when economically feasible, into smaller tasks or quantities to permit maximum participation by small and minority businesses, and women's business enterprises;
• Establishing delivery schedules, where the requirement permits, which encourage participation by small and minority businesses, and women's business enterprises;
• Using the services and assistance, as appropriate, of such organizations as the Small Business Administration and the Minority Business Development Agency of the Department of Commerce; and
• Requiring the prime contractor, if subcontracts are to be let, to take the affirmative steps listed above.

For purchases greater than the micro-purchase threshold, the PI must document the following:

• The attempt to identify MWBE's who are potential contractors;
• The attempt to solicit bids from the potential MWBE contractors;
• The bid responses from the potential MWBE contractors; and
• The determination of and rationale for the selected contractor.

This documentation will be maintained by the Business Office, in the grant file.

Domestic Preferences for Procurements (UG §200.322)
As appropriate and to the extent consistent with law, the Colleges should, to the greatest extent practicable under Federal awards, provide a preference for the purchase, acquisition, or use of goods, products, or materials produced in the United States (including but not limited to iron, aluminum, steel, cement, and other manufactured products). "Produced in the United States" means, for iron and steel products, that all manufacturing processes, from the initial melting stage through the application of coatings, occurred in the United States. "Manufactured products" means items and construction materials composed in whole or in part of nonferrous metals such as aluminum; plastics and polymer-based products such as polyvinyl chloride pipe; aggregates such as concrete; glass, including optical fiber; and lumber. This requirement must be included in all subawards, including all contracts and purchase orders for work or products under Federal awards.

The Federal awarding agency or pass-through entity is entitled to perform various purchasing reviews. The Colleges must comply with requests related to these reviews to the extent specified in UG §200.325.