Federal Grants Procurement Policy

Responsible Office or Person: Business Office

Issued: July 1, 2018

Scope

This Procurement Policy for Federal Grants applies to all expenditures of funds received through federal grants, whether those funds come directly from a Federal agency or through an intermediary, known as a “pass-through entity.” This Policy does not govern expenditure of funds received from other sources (e.g. research foundations, alumni donations, etc.). While reference may be made from time to time simply to “procurement transactions,” this Policy applies only to such transactions funded with federal funds.

Policy Statement

Federal law imposes particular requirements on the use of federal grants. This Procurement Policy is designed to ensure that Carroll University (“Carroll”) complies with those requirements. Individual federal grants may contain further requirements that are unique to those grants and in addition to the requirements of this Policy. It is therefore important for Principal Investigators to work closely with the Business Office and the Grants and Research Office to ensure compliance with the requirements of each grant.

This policy is consistent with Final Guidance issued by the Federal Office of Management and Budget on December 26, 2013 and effective as of December 26, 2014, amended by Implementing Statutory Changes to the Micro-Purchase and the Simplified Acquisition Thresholds for Financial Assistance dated June 18, 2018. Additionally, pursuant to the September 10, 2015, update from the Office of Management and Budget (OMB), the University has elected to adopt these new standards as of July 1, 2018.

General Procurement Standards (Section 200.318)

A. Ethics and Conflicts of Interest (200.318(c)(1)

Carroll employees involved in expenditure of federal grant funds must avoid any actual or apparent conflict of interest. Employees may not derive any personal financial or other benefit from any contract or transaction using federal grant funds. This prohibition includes parents, children (biological, foster, and/or adopted) and siblings, as such close relationships could give rise to an appearance of conflict. In addition, contractors or consultants who draft bid specifications or requests for proposal on Carroll’s behalf are thereby disqualified from bidding on those opportunities. While contractors or consultants are not automatically disqualified from other opportunities, care must be taken to ensure that their work for the University does not give them unfair advantage over competitors.

Carroll employees may not accept kickbacks, rebates, gratuities or other gifts or tokens of appreciation from vendors paid through federal grants. Rebates and discounts to Carroll are permitted provided they 1) comply with all applicable law, 2) provide a direct benefit to Carroll, 3) result from an arm’s-length negotiation, which is fully documented in the file, and, 4) are consistent with vendor’s standard pricing or discounting policies.

Failure to comply with these requirements may result in disciplinary action, including termination of employment.

The individual schools and departments of Carroll may not bid on contracts offered by other schools or departments if such bidding would create an actual or apparent conflict of interest, create an appearance of favoritism or interfere with free and open competition with bidders from outside the University.

To avoid conflict or the appearance of conflict, contractors or consultants and affiliates who prepare specifications, statements of work or other material portions of requests for proposal are excluded from bidding on the underlying work.

Suspected or observed violations of this Policy shall be reported to the Office of Academic Affairs. Carroll strictly prohibits retaliation of any type or nature against anyone for making such reports in good faith. Immediately report any observed or suspected retaliation to the Office of Academic Affairs and/or to Human Resources as appropriate.

B. General Requirements ((200.318 (d-g)

The following requirements are applicable to all procurement transactions, regardless of size.

Procurement transactions shall be conducted in a lawful and ethical manner.

Unnecessary/duplicative purchases are not permitted (and are not reimbursable expenses).

In collaboration with the Business Office, Principal Investigators are responsible to ensure contractor performance in accordance with their contracts or purchase orders.

Whenever possible:

• Consider leasing versus purchasing;

• Enter into agreements to share common goods or services with other educational institutions, non-profit organizations or governmental entities;

• Use Federal excess or surplus property in lieu of new purchases;

• Consider breaking purchases into smaller consignments, or consolidating purchases, if doing so will produce lower pricing or greater value.

Competition (Section 200.319)

All procurement transactions must be conducted in a manner providing full and open competition. Federal grant regulations set aside preferences required by state or local law, unless the grant or applicable Federal law expressly mandate or encourage observance of such preferences. Federal preemption does not apply, however, to state licensing laws.

In order to ensure objective contractor performance and eliminate unfair competitive advantage, contracts that develop or draft specifications, requirements, statements of work, or invitations for bids or requests for proposals must be excluded from competing for such procurements. Situations considered to be restrictive of competitions include but are not limited to:

• Placing unreasonable requirements on firms in order form 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;

• Organizational conflicts of interest;

• Specifying only a “brand name” product instead of allowing “an equal” product;

• Any arbitrary action in the procurement process.

To further ensure free and open competition, all solicitations shall:

• Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Features or requirements that unduly restrict competition are not permitted. “Brand name or equivalent” descriptions may be used as a means to define the performance or other salient requirements of procurement. The specific features of the named brand to be met by offers must be clearly stated; and

• Identify all requirements and all factors to be used in evaluating bids.

• Ensure that all prequalified lists of persons, firms, or products used in acquiring goods and services are current and include enough qualified sources to ensure maximum open and free competition. No potential bidder shall be barred from submitting during the proposal period.

Methods of Procurement (Section 200.320)

Purchasing Guidelines

Method	Aggregate Dollar Amt.	Notes 1:	Notes 2:
Micro-Purchase	Not to exceed $10,000 ($2,000 in the case of acquisitions for construction subject to the Davis-Bacon Act).	No quotations required if price is reasonable.	To extent practicable, distribute equitably among qualified suppliers.
Small Purchase	$10,001 to $250,000	Rate quotations from an adequate number of qualified sources.	No cost or price analysis required.
Sealed Bid	Over $250,000	Primarily constructions projects, firm fixed price contract.	Price is a major factor, formal process for bidding
Competitive Proposals	Over $250,000	Fixed price or cost reimbursement	RFP with evaluation methods for an adequate number of qualified sources.
Sole Source	Any dollar amount	No competition must be authorized by agency (or pass- through entity).	Unique or public emergency.

Micro Purchases (Less than $10,000)

Purchases under $10,000 are typically standardized goods or services available from many sources. Such purchases do not require competitive bidding or detailed documentation.
Whenever practicable, micro purchases should be distributed equitably among qualified suppliers. The threshold for micro purchases is $2,000 in the case of acquisitions for construction subject to the Davis-Bacon Act.

Small Purchases – Over $10,000 but Less Than the “Simplified Acquisition Threshold: (Currently $250,000)

Purchases larger than $10,000, but less than the Simplified Acquisition Threshold, require additional research and documentation. At minimum, written quotations should be obtained from at least two competing sources.

There is no requirement that contracts be awarded solely on the basis of price (i.e. to the lowest bidder).

Procurement by Sealed Bids

Sealed bids are publicly solicited requests for bids or proposals at a fixed contract price. The contracts are awarded to the bidder whose bid conforms in all material respects to the specified requirements and offers the lowest price. Sealed bids are the preferred method for procuring construction contracts if the following conditions apply:

A complete, adequate, and realistic specification or purchase description is available;
Two or more responsible bidders are willing and able to compete effectively for the business; and
The procurement lends itself to a fixed price contract and the selection of the successful bidder can be made principally on the basis of price.

If sealed bids are used, the following requirements apply:

The invitation for bids shall be publicly advertised;
Bids must be solicited from an adequate number of known suppliers, providing them sufficient time to respond;
The invitation for bids must fully describe the items or services sought, so that the bidder may properly respond;
All bids will be opened at the time and place prescribed in the invitation for bids;
A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder.Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and
Any or all bids may be rejected if there is a sound, documented reason.

Procurement by Competitive Proposals

Competitive proposals are used when more than one source is submitting an offer, and either a fixed price or cost-reimbursement contract is awarded. It is generally used when conditions are appropriate for the use of sealed bids. When this method is used the following conditions apply:

Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Any response to the publicized requests for proposals must be considered to the maximum extent practical;
Proposals must be submitted from an adequate number of sources;
Carroll will have a written method for conducting technical evaluations of the proposals received and for selecting recipients;
Contracts must be awarded to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered; and
Carroll may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby competitors’ qualifications are evaluated and the most qualified competitor is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms are a potential source to perform the proposed effort.

Sole Source Procurement

“Sole source” or non-competitive procurement may be used only when one or more of the following circumstances apply:

The item is available only from a single source;
Public exigency or emergency 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 Carroll; or
After solicitation of a number of sources, competition is determined to be inadequate.

Contracting with Small and Minority Businesses, Women’s Business Enterprises, and Labor Surplus Area Firms (Section 200.321)

Carroll shall take all necessary affirmative steps to assure that minority businesses, women's business enterprises, and labor surplus area firms are used when possible. Affirmative steps include, at minimum:

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 observe the foregoing requirements.

Contract Cost and Price (Section 200.323)

In those instances in which no price competition exists, the supplier’s profit shall be negotiated as a separate line item. To establish a fair and reasonable profit, consider the:

Complexity of the work to be performed;
Risk borne by the contractor;
Contractor's investment;
Amount of subcontracting;
Contractor’s record of past performance;
Industry profit rates for similar work in the surrounding area.

Construction contracts may not be awarded based on a “cost plus” pricing method. The fee payable under the contract must be expressed in dollars to be paid, and not as a percentage of any cost component. In addition, value engineering should be applied to all construction contracts.

Contracts shall be awarded only to providers of known integrity and ability to fulfill the contract requirements. Each project manager must maintain records detailing the history of all procurements. At a minimum, these records will disclose the rationale for the:

Method of procurement;
Selection of contract type;
Contractor selection or rejection; and,
Basis for the contract price.

Time and material contracts may be used only after a determination that no other contract is suitable and the contract includes a ceiling price that the contractor exceeds at its own risk.

Federal Awarding Agency or Pass-Through Entity Review (Section 200.324)

Records of all procurement transactions, and all relevant supporting documents, shall be available upon request to the federal granting agency or the pass-through agency responsible for the funds provided to Carroll.

Bonding requirements (Section 300.325)

Unless the granting agency has made a separate determination accepting Carroll’s bonding policy, all contracts for construction or facility improvement contracts or subcontracts exceeding the Simplified Acquisition Threshold shall meet the following requirements:

Each bidder shall provide a bid guarantee equivalent to five percent of the bid price. The “bid guarantee” must consist of a firm commitment such as a bid bond, certified check, or other negotiable instrument accompanying a bid as assurance that the bidder will, upon acceptance of the bid, execute such contractual documents as may be required within the time specified.
Successful bidders shall, prior to contract execution, provide a performance bond for 100 percent of the contract price to secure fulfillment of contractor's obligations under such contract.
Successful bidders shall also provide, prior to contract execution, a payment bond for 100 percent of the contract price to ensure payment to persons supplying labor and materials under the contract.
All bonds shall be issued by reputable and financial sound bonding companies licensed to do business in the State of Wisconsin.

Mandatory Contract Provisions for Non-Federal Entities (Section 200.326, Appendix II to Part 200 – Contract Provisions for non-Federal Entity Contracts Under Federal Awards

Each grant may require that contracts funded by that grant contain certain provisions that apply only to that grant. To ensure compliance, Carroll uses contract forms provided by the Federal Demonstration Partnership for all sub-awards and contracts. No other contract forms may be used without the advance, written consent of the Office of Academic Affairs.

Required terms are found in Federal Demonstration Partnership templates.

Consequences of Noncompliance

Noncompliance can result in a variety of adverse consequences for Carroll, including:

Temporary withholding of payments pending correction of the deficiency.
Disallowance of all or part of the cost of the activity or action not in compliance.
Complete or partial suspension of the Federal grant.
Suspension or debarmentof Carroll from participation in federally funded programs.
Withholding of further Federal funding.
Suit to recover funds paid for non-compliant activities.
Criminal prosecution.

Noncompliance with this policy can have a variety of adverse consequences for Carroll, including loss of access to federal funding (including student loan funding). Therefore failure to comply with these policies and procedures may result in disciplinary action, including termination of employment. In addition, violation of Federal requirements may expose an individual to civil and criminal prosecution