EDGAR and Texas School District Procurement · 2019. 4. 26. · EDGAR requires a competitive process (e.g. quotes, bids, etc.) (b) Procurement by small purchase procedures. Small

EDGAR and Texas School District ProcurementRegion One ESCPurchasing Advisory CouncilApril 26, 2019

What is EDGAR?

Quote the Raven, “Who are you anymore?”

Learning Objectives

▪ Gain knowledge related to EDGAR Requirements

▪ Learn about compliance issues related to EDGAR

▪ Learn best practices to develop and/or acquire EDGAR-related resources

▪ Understand purchasing guidelines for EDGAR

▪ Review 2 CFR Part 200 – Procurement

▪ Compare & contrast 2 CFR Part 200 with current practices

Introduction to the New EDGAR

Purpose

The purpose of EDGAR is to “prevent fraud, waste and abuse” (2 CFR §200.25(e) –Cooperative audit resolution)

Introduction

▪ EDGAR = Education Department General Administrative Regulations

▪ EDGAR = consolidation of earlier guidance documents circulars issued by the Office of Management and Budget (OMB)

▪ Notice of Grant Award (NOGA) now includes an EDGAR notice

▪ Assistance in answering questions (“FAQs”) is available through the Texas Education Agency (TEA)

https://tea.texas.gov/WorkArea/DownloadAsset.aspx?id=51539608919

Introduction (cont.)

2 CFR Contents include:

▪ Subpart A – Definitions

▪ Subpart B – General Provisions

▪ Subpart C – Pre-Award Requirements

▪ Subpart D – Post Award Requirements▪ Subpart E – Cost Principles

▪ Subpart F – Audit Requirements


Subpart D – Post Award Requirements

▪ Standards for Financial and Program Management

▪ Property Standards

▪ Procurement Standards▪ Performance and Financial Monitoring and Reporting

▪ Sub-recipient Monitoring and Management

▪ Records Retention and Access

▪ Remedies for Noncompliance

▪ Closeout, Post Closeout and Collection of Amounts Due


2 CFR 200 Procurement Standards

▪ 200.318 General Procurement Standards

▪ 200.319 Competition

▪ 200.320 Methods of Procurement

▪ 200.321 Contracting with small and minority businesses

▪ 200.322 Procurement of recovered materials

▪ 200.323 Contract cost and price

▪ 200.324 Federal awarding agency or pass-through entity review

▪ 200.325 Bonding requirements

▪ 200.326 Contract provisions

EDGAR General Procurement Standards

EDGAR General Procurement Standards

§200.318 General procurement standards.

(a) The non-Federal entity must use its own documented procurement procedures

(b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders

EDGAR General Procurement Standards (cont.)

How do we ensure compliance?

▪ Purchasing Policy (CH Local)

▪ Purchasing Procedures

▪ Contract Management Procedures

▪ Communication

Integrated EDGAR State and District Purchasing Process Flowchart

EDGAR Interactive Flow Chart

▪ https://members.tasbo.org/imis/images/TASBODocs/EDGAR1/story_html5.html

https://members.tasbo.org/imis/images/TASBODocs/EDGAR1/story_html5.html

Purchasing Grace Period

2 CFR §200.318(a)

Purchasing Grace Period

All Grace Periods have expired.

• Start dates are either July 1 or September 1, 2018.

What is the fiscal year start date for EDGAR implementation for your school district?

July 1, 2018 (Fiscal Year 2018/2019)

September 1, 2018 (Fiscal Year 2018/2019)

Rules and Regulations – Federal Register Vol. 82, No. 94, Wednesday, May 17, 2017

Conflict of Interest

2 CFR §200.112 and §200.318(c)

Conflict of Interest

“A situation in which a person or organization is involved in multiple interests, financial interest, or otherwise, one of which could possibly corrupt the motivation of the individual or organization.”*

*Wikipedia -https://en.wikipedia.org/wiki/Conflict_of_interest

https://en.wikipedia.org/wiki/Conflict_of_interest

Conflict of Interest (cont.)

District must maintain written standards of conduct covering conflicts of interest

Standards are to govern the actions of its employees engaged in the selection, award and administration of contracts

May set standards for non-substantial or if the gift is an unsolicited item of nominal value

Policies DBD(LEGAL) and (LOCAL)

Conflict of Interest (cont.)

State of Texas Ethics Commission Forms

Local Government Code Chapter 176

Conflict of Interest Statement (CIS) – School District employees

Conflict of Interest Questionnaire (CIQ) – Vendors

Purchasing Through Cooperatives

2 CFR §200.318(e)

Purchasing through Cooperatives

▪ Allowed as an acceptable purchasing method by the Texas Education Code 44.031(a)(4)

▪ EDGAR rules encourage the use since they “foster greater economy and efficiency”

▪ Must follow the same rules as districts

▪ District’s responsibility to verify a coop awarded vendor’s eligibility

▪ “Micro” purchases are not an issue if the coop’s contracts are competitively bid

▪ A cooperative cannot provide or be delegated the responsibility to provide the price analysis portion of the EDGAR requirement – this is a district requirement

Purchasing through Cooperatives (cont.)

TEA EDGAR FAQ indicates Cooperatives can be used, but districts must verify:

▪ What is required (e.g. certification) and how often must verification be obtained?

▪ What is required with lump-sum pricing if value is $250,000 or more?

▪ Does the district conduct an independent estimate and/or cost/price analysis?

▪ How should rebates be handled?

▪ Can you credit to the grant or does the money have to be returned to the Federal government?

Competition

2 CFR §200.319

Competition

▪ Procurements must provide full and open competition

▪ Vendors assisting in the development of specifications, statements of work, etc., must be excluded from competing for such procurements

▪ EDGAR prohibits the use of geographic preference (exception for A/E services by selection criterion if appropriate number of qualified firms are available)

▪ District must have written procedures for procurement transactions

Methods of Procurement

2 CFR §200.320



▪ Micro Purchases

▪ Small Purchases

▪ Procurement by Sealed Bids

▪ Procurement by Competitive Proposals

Micro and Small Purchases

2 CFR §200.320(a) and (b)

§200.320 Methods of Procurement (cont.)

Micro Purchases (2 CFR 200.320(a))

▪ From $0 to $10,000

▪ EDGAR does not require a competitive process (e.g. quotes, bids, etc.)

(a) Procurement by micro-purchases. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (§200.67 Micro-purchase). To the extent practicable, the non-Federal entity must distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive quotations if the non-Federal entity considers the price to be reasonable.



Micro Purchases (continued)

▪ Directive from TEA (released November 29, 2018)To increase LEA’s micro-purchase flexibility, TEA is providing the following guidance: The $10,000 “aggregate amount” threshold applies to purchases of “like-type” of items In its local policies and procedures, the LEA must define what like-types of items may be micro-purchased The $10,000 threshold applies to each like-type that the Lea defines Once the LEA reaches the $10,000 threshold it must follow small purchase procedures and collect at least

two price quotes for additional purchases of items for that like type A like-type may correlate to a subcategory of a commodity code (not to the commodity code itself) Like-type may not be defined as a single purchase order or a single vendor For each like-type that the LEA defines in its local policies and procedures, it may expend up to the

$10,000 threshold across all its Federal grant funds for the entire fiscal year TEA does not limit the number of like-types that the LEA may define, nor does TEA limit the cost of the

items categorized as like-types. LEAs must be aware, however, that their like-type definitions are subject to monitoring and audit

LEAs must be prepared to submit their like-type definitions to TEA monitors and auditors

Micro Purchase Tracking

▪ You will need an EDGAR Fund code list (NOGA based)

▪ Don’t mix funds on your RQ/PO’s

– If you do, you will have to code line items

▪ Code each RQ/PO for a “like-type” or sub-commodity code

Fund Code List

Sub-Commodity Codes

Micro Purchase Tracking Report


Small Purchases (2 CFR 200.320(b))

▪ From $10,000 to $250,000

▪ EDGAR requires a competitive process (e.g. quotes, bids, etc.)

(b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold.*

*If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.

Changes to Threshold

Micro and Small Purchases (cont.)

Multiple Award Contracts

▪ Most multiple award contracts are solicited meeting the State of Texas requirements

▪ If a discount from catalog, price has to be calculable, so some form of pricing has to be made available by the vendor

▪ For Federal purchases made through these types of contracts, it is suggested that the district attempt to do some form of quotation process within the multiple award vendors

▪ This is a best practice, not a requirement, however, this will satisfy both the EDGAR and State requirements

PROCUREMENTS BY SEALED BID

2 CFR §200.320(c) and (d)

§200.320 Methods of Procurement

Sealed (formal) Bids (2 CFR 200.320(c))

▪ From $250,000 (effective 9/1/2018)

▪ From $50,000 per TEC 44.031 (more restrictive)

(c) Procurement by 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. The sealed bid method is the preferred method for procuring construction, if the conditions in paragraph (c)(1) of this section apply.


Sealed (formal) Bids (2 CFR 200.320(c)) (cont.)

▪ Invitation for Bid (based on price – preferred method)

▪ Competitive Proposals (price and other factors)

▪ Procurement by noncompetitive proposals (single source)

Procurements by Sealed Bid

▪ Formally advertised, publicly solicited

▪ Firm, fixed price pricing (lump sum or unit price)

▪ Awarded bid must conform to all the material terms and conditions of the solicitation

Procurements by Sealed Bid (cont.)

Sealed bid preferred method for procuring construction if:

▪ Complete, adequate, and realistic specifications / description is available

▪ There are two or more responsible vendors willing to compete

▪ Procurement lends itself to a firm fixed price award


Sealed Bid requirements

▪ Adequate number of vendors

▪ Sufficient time available to respond

▪ Are publicly advertised

▪ Include well defined specifications and pertinent attachments

▪ Responses are opened at a time and place prescribed in the solicitation

▪ Responses are opened publicly

▪ Awarded to the lowest responsive and responsible vendor with the lowest price


Sealed Bid requirements (cont.)

▪ Adequate number of competitive proposers are available

▪ Fixed price or cost-reimbursement type of contract

▪ All evaluation factors are identified based on relative importance

▪ Awarded to the most advantageous to the program with price and other factors considered

NONCOMPETITIVE PROPOSALS

2 CFR §200.320(f)

Noncompetitive Proposals

May only be used if one or more of the following circumstances apply:

▪ The item is available only from a single source;

▪ The Federal awarding agency or pass-through entity (TEA) must authorize noncompetitive proposals in response to a written request from the non-Federal entity;

▪ The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation; OR

▪ After solicitation of a number of sources, competition is determined inadequate

Noncompetitive Proposals (cont.)

TEA has stated that if a specific vendor and/or item is identified within a grant, this alone does not make for a non-competitive procurement

CONTRACTING WITH SMALL AND MINORITY BUSINESSES

2 CFR §200.321

Contracting with Small / Minority Businesses

▪ Must take all necessary affirmative steps to assure that minority businesses, women's business enterprises, and labor surplus area firms are used when possible

▪ Placing qualified small and minority businesses and women’s business enterprises on solicitation lists

▪ Requiring the prime contractor to take the same affirmative steps

PROCUREMENT OF RECOVERED MATERIALS

2 CFR §200.322

Procurement of Recovered Materials

▪ Section 6002 of the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act

▪ In effect when the purchase price of the item exceeds $10,000 or the value of the quantity acquired during the preceding fiscal year exceeded $10,000

▪ Requires that items purchased contain the highest percentage of recovered materials practicable

CONTRACT COST AND PRICE ANALYSIS

2 CFR §200.323

§200.323 Contract Cost and Price

Simplified Acquisition Threshold (SAT) (2 CFR 200.323(c))

▪ From $250,000 (effective 9/1/2018)

▪ EDGAR requires:

• a formal competitive process (bids or proposals)

(a) The non-Federal entity must perform a cost or price 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 non-Federal entity must make independent estimates before receiving bids or proposals.

Contract Cost and Price Analysis

▪ Both contract cost or price are a trigger when a procurement meets the Simplified Acquisition Threshold (SAT) which is greater than $250,000

▪ Analyzing the cost or price of purchase based on what the entity anticipates the cost of the procurement to be

▪ Includes contract modifications

Contract Cost and Price Analysis (cont.)

Independent Estimate

▪ For solicitations anticipated to be in excess of the SAT

▪ Entity must do an independent estimate prior to publishing the solicitation to have a basis point for analyzing the solicitation responses


Cost Analysis

▪ Used when no competition could be realized or does not exist including:

• One bid proposals

• Sole source purchases approved by TEA

• Emergency procurements

• Professional services where no competition exists

• Existing contracts that were previously solicited


Price Analysis

▪ Evaluation of reasonableness of price results when the initial price determination is compared to the bids/proposals submitted by multiple vendors where competition exists and a price was submitted

▪ A normal part of a standard, formal procurement process used by Texas school districts (e.g. bid tabulations)


Sample Forms

for Price

(Tabulation)

FEDERAL AWARDING AGENCY OR PASS-THROUGH ENTITY REVIEW

2 CFR §200.324

Federal Awarding Agency or Pass-through Entity Review

▪ The district must be prepared to provide documentation to show an item or service specified is the one being proposed

▪ Includes solicitation documents, independent cost estimates (as applicable)

▪ The district may choose to self-certify its procurement system

BONDING REQUIREMENTS

2 CFR §200.325

Bonding Requirements

▪ Identified only for construction or facility improvement contracts that exceed the Simplified Acquisition Threshold (SAT)

▪ District policy acceptable if determined to protect Federal interest

▪ Minimum requirements:

• Bid Guarantee to be equivalent to 5% of bid price

• Performance and Payment bonds to be 100% of the contract price

Contract Provisions

2 CFR §200.326

Contract Provisions

▪ Reference made to Appendix II to Part 200 titled Contract Provisions for non-Federal Entity Contracts Under Federal Awards

▪ No threshold designation – includes all Federal fund purchases

▪ Requires contracts to contain the applicable provisions described in the appendix

▪ Many approaches to securing this information

In addition to other provisions required by the Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable.

https://www.govinfo.gov/content/pkg/CFR-2014-title2-vol1/pdf/CFR-2014-title2-vol1-part200-appII.pdf

Contract Provisions (cont.)

▪ Best practice would suggest that all awarded vendors re-certify annually for term contracts

▪ Securing affirmations for all vendors for all bids will assist districts with their bid process allowing for Federal funds to be used


Contract Provisions are to include:

▪ Breach of Contract language

▪ Termination for Cause

▪ Equal Employment Opportunity

▪ Davis-Bacon Act

▪ Contract Work Hours & Safety Standards Act

▪ Rights to Inventions

▪ Clean Air Act


Contract Provisions are to include:

▪ Debarment and Suspension

▪ Byrd Anti-Lobbying

▪ Record Retention

▪ Energy Policy & Conservation Act

▪ Buy America provisions

▪ Certification of Applicability to Sub-contractors


Contract Provisions affirmations can be in one of two ways:

▪ Hard Copy – Affirmation by initials

▪ Electronic – Affirmation by submittal


What to do if…?

▪ Pre-EDGAR Contracts

– Suggested that all pre-EDGAR contracts by re-solicited

▪ If the above is not feasible, post-certify the vendor utilizing the same documentation used in solicitations

Other EDGAR Points to Consider

Applicable Credits (2 CFR §200.406)

Any revenue, rebates, etc., related to a particular purchase must be credited back to the appropriate grant

▪ Such credits could be seen from:

• Cooperative rebates

• Purchasing card rebates

• Income from sale of surplus

Extensions, Renewals, and Amendments

Extensions, renewals, and amendments are not exempt from the new EDGAR requirements

▪ Options are:

• Resolicit the contract under the new EDGAR requirements (if allowable by the contract provisions)

• Post-certify if the original procurement meets the new EDGAR requirements

How to Have “The Talk”

“The Talk”…

▪ Meet with all district staff that have the authority to expend Federal funds that fall under EDGAR

▪ Start with the lead staff members and work a plan to meet with all individuals

▪ Set up time and ensure everyone gets trained

▪ Provide adequate documentation and guidance necessary for them to be successful and compliant

Things to Remember and Takeaway

Things to Remember…

▪ Establish documented procurement policy/procedures NOW

▪ Review and update the district’s purchasing policy (e.g. CH(Local), DBD(LOCAL), etc.)

▪ Ensure that the district’s policies for conflict of interest are up to date with the State and Federal standards

▪ Develop procedures to verify and secure proper compliance from cooperatives

▪ Develop and implement written purchasing procedures that comply with both State and Federal requirements

▪ Develop and implement written contract management procedures, and communicate them to those that need to know

Things to Remember… (cont.)

▪ Require certification documents from suppliers ($1 of federal spend)

▪ Provide thorough documentation to show that requirements were followed

▪ Review existing contracts before extensions or renewals for compliance

▪ Have “The Talk” with all district staff that have the authority to make purchases with Federal funds

TEA Common Procurement Findings

▪ Did not maintain adequate policies and procedures to comply with procurement standards

▪ Did not identify the method of procurement for purchases

▪ Purchases did not adhere to appropriate procurement standards

▪ Did not obtain adequate number of quotations to support expenditures made with Small Purchase Procedures

▪ Procurement by Noncompetitive Proposal did not meet one of the four allowed circumstances

▪ Lack of executed agreement or contract with the vendor

TEA Common Procurement Findings (cont.)

▪ Documentation not provided to demonstrate compliance with Suspension and Debarment

▪ Purchase made through purchasing cooperative without an agreement

▪ Purchase made through purchasing cooperative did not comply with Federal procurement requirements

Travel – Hotel Taxes

My LEA is exempt from paying sales tax on lodging, but sometimes hotels charge taxes and other fees, such as city taxes or parking at the hotel. Can Federal funds be used to reimburse taxes that do not qualify for exemption by the State of Texas?

Yes, employees may be reimbursed for applicable taxes and fees with Federal funds as long as the travel costs are allowable under the grant program and EDGAR and are not in conflict with local policy.

Travel – Meal Reimbursement

If an employee seeks reimbursement from a federal grant for a meal that includes sales tax from an establishment that did not accept/ honor the tax exempt certificate, may the full cost of the meal be reimbursed with Federal funds?

According to the Texas Comptroller’s Office, educational organizations can apply for exemption from certain taxes, such as Texas sales tax, hotel occupancy tax and franchise tax, if applicable. However, not all organizations are exempt from these taxes. Check with your LEA’s exemption status. Federal funds can be used to reimburse the actual amount expended on meals per day, but cannot exceed the maximum allowable. Tips and gratuities are not reimbursable. Always check local travel policies on reimbursements.

https://www.gsa.gov/travel/plan-book/per-diem-rates

Pre-Payment of Travel Costs

Can an LEA use Federal grant funds to pay for travel costs prior to the date of travel if it requires employees to sign a form that states that if they do not actually take the travel, obtain a full refund or find a replacement, then they will need to repay the LEA for the Federal grant funds expended?

No. EDGAR does not allow obligation of Federal funds until travel is taken. There is nothing an LEA can do to work around this regulation. Any travel expenses charged or obligated to a Federal grant prior to the travel being taken could be considered an unallowable expense, even if the employee takes the travel as planned.

Travel – Supplement Not Supplant

If we use local funds to pay or travel initially and then use Federal funds to reimburse the cost once the travel is taken, could this be considered a supplant?

When Federal funds are used for travel, State or local funds must be initially used. Federal funds can reimburse those charges once the travel is taken. Documentation should reflect how the funds were intended to be charged and then how they were actually charged in that fiscal year. The grant application must accurately reflect how the funds will be used. Any changes to the budget must be done through the submission of an amendment to the application prior to the obligation of the funds.

Questions?

Documents

EDGAR and Texas School District Procurement · 2019. 4. 26. · EDGAR requires a competitive process (e.g. quotes, bids, etc.) (b) Procurement by small purchase procedures. Small