The requirement for written procurement procedures is part of the Uniform Guidance that many federal grant recipients have been slow to implement.
So if you are wondering how to create the “dreaded” written procurement procedures manual from scratch, don’t worry.
I have created a roadmap for success on this federal grant requirement.
Written Procurement Procedures
Now, you might expect that after a three-year grace period for implementation of the procurement standards for federal funding, everyone would have plenty of time to get the new procedures written.
But I think it had the effect of “out of sight, out of mind” as we all got busy with all the other requirements for federal grants.
However, the time for procrastination of this critical element of sound grant management is at its end.
>>This means auditors and funders are going to be more insistent about seeing your actual written policies for procurement.
More than ever, your program, procurement, and finance staff all need to understand your process, and include the required elements in your written documentation.
This will reduce the risk of cost disallowance and keep the grants well-managed.
So, you may be thinking…
What’s the first step if I’ve decided that NOW is the time to update or even create our first written procurement procedures manual?
Or you may be wondering what goes into a procurement procedures manual that keeps you in compliance with the Uniform Guidance?
In this article, we’ll walk you through how to create a written procurement procedures manual from scratch for your organization.
I will also cover an easy-to-implement solution to get your procurement manual completed in record time!
Get Started: Table of Contents
The place to begin creating your documentation is to outline what things will be in your written Procurement Manual.
A Table of Contents can help you organize the topics you want to cover in your written procurement procedures from beginning to end.
You should lay out how your procurement with federal funding is handled from the purchase requisition stage all the way to the end of the procurement.
This also includes the related procurement records retention.
The Table of Contents can include major categories like:
- Details about Procurement Office
- Glossary of Terms
- List of Federal Procurement Rules
- Description of the Procurement Life Cycle
Most importantly, the Table of Contents provides a structure for the overall framework of procurement with federal funding at your organization.
Section One: Details about the Procurement Office
Moving on to the next step to start on the details in your written Procurement Procedures Manual, describe the Procurement Office.
You may know the Procurement Office as the Purchasing Department, or the Strategic Sourcing Office, or the Office of Strategic Procurement.
But no matter what you call it, this is the place where the bulk of non-salary spending occurs on federal grants with help from other departments such as Sponsored Programs, Legal and Finance.
Here are some of the things you could include in this section:
- About the Office
- The <Office Name>
- Description of Procurement Office
- Responsibilities of various personnel
- Key contacts within the Procurement Office
Finally, a Glossary of Terms is a great thing to add to clarify the unique terminology used in procurement with federal grants.
Let’s admit it, working with federal grants means lots of special terms and jargon.
I also like to include a reminder to employees at the beginning of the document about the importance of ethical behavior when spending taxpayer funds.
When procurement is not done well, it can be the source of large cost disallowances, damaged reputations, and even criminal prosecution.
Section Two: Federal Grants Procurement Rules
The next section is where you would list what regulations you are using to manage your procurements with federal grant funds.
And yes, grants have lots of regulations both from the Office of Management and Budget (OMB) and also the individual federal agencies.
For most of us, the main set of regulations comes from new grant regulations contained in 2 CFR Part 200 also known as the new Uniform Guidance.
This section should also describe what processes and procedures you must have in place to support the federal procurement standards requirements.
You would also specify things like:
- General Procurement Standards in the Uniform Guidance
- Special Rules for States
- Standards of Conduct for making procurement decisions that are free from conflicts of interest and non-competitive practices
- Other Rules like:
- Cost Principles
- Debarment and Suspension
- Contract Provisions
- Individual federal agency-specific procurement rules
The goal of this section is to have a comprehensive list of what procurement rules you have to follow as a federal grant recipient.
This will also help employees new to grants have a better understanding of what is required when you purchase goods and services with federal funding.
In this section, you will walk through your process of procuring goods and services.
Walk through the process that supports federal awards from the purchase requisition to the documentation of the history of the procurement and meeting record retention requirements.
You should include the basic steps in the procurement lifecycle such as the purchase request and authorization.
Also, look at how to:
- Choose the right procurement method and contract type
- Soliciting for proposals
- Ensuring competition as required
- Administer contracts
- Retain records.
Here are some examples of each of those areas:
- How you request the purchase of goods or services for your grant?
- When does the purchase need to be authorized by another person?
- Who is the appropriate person for authorization of spending?
- Does there need to be a budget review of the request prior to the purchase?
- Does someone need to review the purchase request to ensure the costs are allowable to charge the federal award?
Spending Grant Funds
This is where the rubber meets the road when it comes to procurement processes. (And procedures often get overlooked in a rush to spend the grant funds!)
You should include your procedures and processes for:
- Ensuring purchases are reasonable and necessary to support the work of the federal award
- Reviewing contractors to make sure they are responsible and not suspended or debarred from federal spending
- Taking affirmative steps for small business, minority, and women-owned firms to participate in the upcoming solicitations
- Reviewing procurement methods and determining the appropriate levels of documentation and competition for the procurements
- Establishing the appropriate contract type to use
- Disclosing conflicts of interest as appropriate
If you have these policies in other documents, then you would reference those documents in this section rather than duplicate all the policies and procedures.
This next section on managing grant awards covers “the rest of the story” during procurement with federal funding.
- When would bonding be required?
- Do you identify situations requiring prior approval from the federal awarding agency?
- How do you make sure that you aren’t calling a subaward relationship a procurement contract?
- Are you avoiding prohibited contract types and non-competitive practices?
- What special considerations are needed when using consultants?
And the list goes on and on…
Step back and think of all the frequently asked questions (FAQ) by program staff during the period of performance for your grants.
Then put guidance in the manual for the most FAQ about purchasing goods and services for your federal grants.
Closing Out Procurement Transactions
This next part lays out how the procurement is closed out.
Here are a few examples:
- What happens once the goods or services have been delivered or received?
- What records do you need to retain?
- How long do you need to keep the documentation for the history of the procurement?
- What special requirements are needed to document approval of noncompetitive procurements like approved sole source justifications forms?
You may also want to add an index to make it easy for people to find the relevant parts of your Procurement Manual as well.
Section Four: Appendices
An appendix is the “catch-all” place for other things relevant to the procurement for your federal award, that doesn’t “logically” fit in a different section.
It is a great place to add examples of forms, guides, and checklists.
Here are a few things we like to see in the federal Procurement Manual:
- Sample-Purchase Requisition Form
- Sample-Signatory Authorization Form
- Sample-Sole Source Justification Form
- Sample-Purchase Order Form
- Sample-Bid Solicitation Form
- Sample-Solicitation Evaluation Form
- Sample-Receiving Document
- Sample-Services Agreement
- Sample-Subaward Agreement
- Procurement Records Checklist
- Contractors vs. Subawardees Guide
- Contractor Evaluation Form
- Selected Items of Cost Details
- Examples of Funder Prior-Approval Circumstances
What do you think?
Has this article made the creation of your manual go smoother?
If you want a faster way to get your manual created, check out our Editable Procurement Manual Template.
We’ve put together all the key elements of written procurement procedures in this easy-to-implement Word document.
If you don’t want to start from scratch and need results fast, this could be a great solution for you!
>Check out the Editable Procurement Manual Template.
Prefer to D-I-Y Your Federal Grants Management?
Check out our step-by-step guides on creating your own federal award documentation with our three articles:
- How to Create a Grant Management Manual From Scratch
- How to Create a Written Procurement Manual From Scratch
- How to Create a Financial Management Manual From Scratch
I’ve included all the things I’d put in my federal grant documentation if I was starting all over to re-invent the wheel from scratch. 🙂
Ready to Improve Your Grant Management?
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Lucy Morgan CPA, MBA
CEO, Compliance Warrior
Author of “Decoding Grant Management-The Ultimate Success Guide to the Federal Grant Regulations in 2 CFR Part 200” The 2nd Edition is now available on Amazon in Paperback and Kindle versions.