What changes will the new Code of Federal Regulations Section 200 – “Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards” have on your organization? The new code, dubbed the “super circular,” took effect on Dec. 26, 2014 for federal agencies. The implementation timing for community action agencies depends on their current grant agreements. The length and type of existing agreements result in different implementation dates.
While the super circular will have a broad impact on community action agencies, one of the key changes involves funding procurement. Your organization receives federal funding for certain programs in order to provide services to qualified residents in your community. Super circular adjusts current procurement standards, which means you will need to review your processes, documentation and monitoring methods to ensure compliance.
Here are the changes from the old procurement standards to the new super circular:
“‘Super circular’ condenses past OMB circulars.”
Out with the old
One of the reasons why the new code is called the super circular is because it supersedes and consolidates a number of older OMB circulars, including A-21, A-87, A-122 and the circular that covered procurement standards for federal funding: A-110.
The impetus behind the adoption of the super circular is clarity. Some of the language – and having so many rules spread out over multiple circulars – created confusion for community action agencies and other not-for-profits. Where the old procurement rules offered conflicting and confusing guidance, the new super circular removes these duplications and instead offers a streamlined take on federal awards.
Some of the other goals of the super circular include:
- Reduced waste
- Fraud prevention
- Increased transparency
- Greater oversight
What has changed
Here are four of the key procurement changes under the super circular:
1. Procurement methods
There are five procurement methods that are allowable:
- Micro-purchases – Purchases of under $3,000 for acquisition of supplies and services.
- Small purchases – Below the “Simplified Acquisition Threshold” of $150,000.
- Sealed bids – Sealed bids of more than $150,000.
- Competitive proposal – Competitive proposals of more than $150,000.
- Noncompetitive purchases – Proposals that are noncompetitive, sole-sourced special circumstances.
The super circular helps remove confusing language and contradictory mandates from previous circulars. For example:
- Contractor – A non-federal agency receiving funds from a non-federal agency is now considered either a contractor or the standard terminology of subrecipient. This removes the use of the word “vendor” from past circulars.
- Disclosures – With the new super circular, your community action agency is now required to put in writing and disclose all violations of Federal law.
- Performance – The super circular now offers more guidance on performance goals and reporting, so your organization can provide the awarding agency with more actionable data.
- Competition – The super circular removed the phrase “to the maximum extent practical” found in previous procurement-related circulars.
3. Record keeping
Record keeping has received a boost with the super circular. Now, your agency is required to maintain more specific, detailed accounts of all procurements, including:
- The rationale for method of procurement
- The selection of the contract type
- The contractor selection or rejection
- The basis for price
4. Conflicts of interest
One of the other major changes to the new procurement rules involves conflicts of interest. The non-federal awarding agency is required to create conflict of interest policies for each specific award. Your community action agency, on a similar note, must put in writing all potential conflicts of interest and disclose that information to the awarding agency. Both steps must take place in a timely manner.
“Update your policies and procedures to ensure compliance.”
What you should do today
So then, what does the super circular mean for your organization? Thanks to the grace period, your community action agency has an additional fiscal year to make any changes to your existing procurement policies and procedures. However, as previously mentioned, we recommend that you review length of contracts and compare the grant date with the implementation date.
Overall, the super circular has many, albeit minor, changes to procurement rules. Use this time to look over your procedures, check your current documentation and update your monitoring methodologies. If you act now, you won’t have to rush to ensure compliance as the deadline nears.
At Clark Schaefer Hackett, we assist our clients with implementing internal control processes that are consistent with the size and complexity of your organization. Feel free to contact us if you have any more questions about the super circular procurement rules, and stay tuned for an upcoming article on the internal control aspect of the new code.