FEMA Applicants and Recipients of the US Tax Relief Plan to Be Notified of Updates to Procurement Requirements | Baker Donelson

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Entities that enter into contracts funded by federal grants such as the FEMA Public Assistance Program or the Coronavirus State and Local Fiscal Recovery Funds as part of the US bailout, must ensure that their purchases and contracts meet the requirements of 2 CFR Part 200, also known as the “Uniform Rules.” Last fall, the Office of Management and Budget revised 2 CFR Part 200, including procurement standards. These updates apply to awards rendered or disasters declared after November 12, 2020, although some provisions are retroactive to August 13, 2020.

A summary of significant procurement related changes is provided below:

  • Official changes to the simplified acquisition and micro-purchase thresholds. Since 2018, the agencies understood that the simplified acquisition threshold had been raised to $ 250,000 and that the micro-purchase threshold had been raised to $ 10,000 under the National Defense Authorization Act for fiscal 2018. The OMB revisions to 2 CFR Part 200 incorporate it into the regulations. As explained below, the revisions also add flexibility to micro-purchases.
  • Additional Requirements for States. Under the old regulations, “States” (as defined in § 200.90) were only required to comply with three sections of 2 CFR Part 200: § 200.317 (State Purchases), § 200.322 ( Purchases of salvaged materials) and § 200.326 (contract provisions). Under the revised procurement standards, states are now required to comply with five provisions: § 200.317 (Contracting by States), § 200.321 (Contract with Small and Minority Businesses, Women’s Business Enterprises and Government Enterprises surplus labor areas), § 200.322 (National preferences for public procurement), § 200.323 (Purchase of salvaged materials) and § 200.327 (Contractual arrangements).
  • Additional flexibility for micro-purchases. The revised regulations specifically allow the use of acquisition cards for micro-purchases. They also provide a mechanism for non-federal entities to set a micro-purchase threshold above $ 10,000 – up to $ 50,000. To do this, the non-federal entity must self-certify the highest threshold each year, documenting the amount, a rationale, and one of the following:
    • Qualification as a low risk auditee, in accordance with the criteria of §200.520 for the most recent audit;
    • An annual internal institutional risk assessment to identify, mitigate and manage financial risks; or
    • For public institutions, a higher threshold in accordance with state law.

Thresholds above $ 50,000 are also possible, but only with the approval of the federal agency.

  • New § 200.322 National preferences for procurement. Procurement standards now require that non-federal entities “give preference to the purchase, acquisition or use of goods, products or materials made in the United States.” Preference applies to steel products, construction materials composed in whole or in part of non-ferrous metals (e.g. aluminum), plastics and polymer products, aggregates (e.g. concrete), glass (including optical fiber) lumber. This preference must be included in all contracts and subcontracts funded by the award (see below).
  • Additional contractual provisions required. The new 2 CFR § 200.327 (formerly 2 CFR § 200.326), requires that all non-federal entities that enter into contracts funded by federal grants must include certain provisions in those contracts, where applicable. The required contractual clauses are listed in Annex II of 2 CFR part 200. The revisions to Annex II add two new contractual provisions:
    • Prohibition of certain telecommunications and video surveillance services or equipmentt as described in the new § 200.216; and
    • National preferences for procurement as described in the new § 200.322 (see discussion above).

FEMA has issued an interim policy on prohibitions on spending FEMA allocation funds on covered telecommunications equipment or services (FEMA Policy # 405-143-1) which provides a standard contract provision that public aid applicants can use in their new, extended or renewed contracts and subcontracts. Although provided by FEMA, the provision is a useful template for any non-federal entity receiving funding under any federal program subject to 2 CFR Part 200.

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