Insight

Procurement procedures: Is your nonprofit really in compliance?

The relatively new federal procurement standards significantly alter the way not-for-profits receiving federal funding handle purchasing. And while your organization may have changed its written policies to comply with the revised standards, it may be easier to follow the rules on paper than in practice.

Summing up the standards

The standards, “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards,” impose strict requirements on nonprofits receiving federal funds. For example, you must pay attention to the amount of a purchase because it determines the procurement methods you need employ.

“Micro-purchases” of supplies or services up to $3,500 generally can be awarded without soliciting competitive quotes. “Small purchases” of services, supplies or other property that don’t cost more than $150,000 require price or rate quotes from several qualified sources.

For purchases exceeding $150,000, you must select vendors or suppliers based on publicly solicited sealed bids or competitive proposals. Select the lowest bid or the proposal most advantageous to the relevant program based on price and other factors that impact the program performance. Also perform a cost or price analysis for every purchase over $150,000, to make independent estimates before receiving bids or proposals.

Noncompetitive proposals solicited from a single source are permissible in only limited circumstances. For example, they’re allowed in the event of a public emergency where the nonprofit must respond immediately.

Clearing documentation hurdles

You should already be following the revised standards, which went into effect in fiscal year 2017. However, some nonprofits have found it challenging. Significant barriers to full compliance include culture shock and staff resistance. Also, these standards have multiple documentation requirements that few organizations previously met:

• All procurement procedures must be documented in writing. • Conflict of interest policies covering employees involved in procurement as well as all entities owned by or considered “related” to your organization need to be included.• You must keep records detailing each procurement — including bids solicited, selection criteria, quotes from vendors and the final contract price.
Designing a checklist that outlines the decisions needed at each price level will make the process more manageable, as will keeping the required documentation.

Reduce the risk

Failure to comply with procurement standards could result in your nonprofit’s loss of federal funding. You can reduce that risk, though, by auditing your new procedures and processes to confirm that they’re getting the job done. Contact us for assistance.

© 2018

Related Insights

Annual gift tax exclusion amount increases for 2023 | accountant in baltimore county md | Weyrich, Cronin & Sorra

Estate & Wealth Transfer Planning

Annual gift tax exclusion amount increases for 2023

Did you know that one of the most effective estate-tax-saving techniques is also one of the simplest and most convenient? By making maximum use…
Choosing a retirement plan for your small business | quickbooks consultant in baltimore county md | Weyrich, Cronin & Sorra

Management Advisory Services & Business Consulting

Choosing a retirement plan for your small business

Most growing small businesses reach a point where the owner looks around at the leadership team and says, “It’s time. We need to offer employees…
Reinforce your cybersecurity defenses regularly | business consulting services in hunt valley md | Weyrich, Cronin & Sorra

Management Advisory Services & Business Consulting

Reinforce your cybersecurity defenses regularly

If you’ve been in business for any amount of time, you probably don’t need anyone to tell you about the importance of cybersecurity. However,…

Connect with us

Use the form below to send us an email. WCS responds directly to all inquiries and general questions within 24 hours of posting.

This contact form is deactivated because you refused to accept Google reCaptcha service which is necessary to validate any messages sent by the form.