SCHOOL DISTRICT PROCUREMENT LAWSJUST WHEN WE THINK WE’VE GOT IT . . .

Micki Morris, PartnerRogers, Morris & Grover, L.L.P.

SOURCES OF PROCUREMENT LAWS• Texas Education Code Chapter 44

– Goods and Services “other than construction services”

• Texas Government Code Chapter 2269– Construction Services/Public Works

• Texas Government Code Chapter 2254– Certain Professional Services

• 2 CFR Part 200 Uniform Guidance– Purchases funded from Federal Grants

WHY DOES KNOWING THE CORRECT STATUTORY SOURCE MATTER?• Different procurement may rules apply• Contracts not properly procured can be voided or unenforceable• Federal funding can be withheld or revoked• Officials and officers who violate procurement statutes can be subject tocriminal penalties

• Construction services contracts trigger additional requirements (bonding,prevailing wage, use of architectural/engineering services)

• Legal mistakes can:• DELAY projects and services• Subject the District to additional costs and liability to to vendors

PENALTIES FOR VIOLATION• Officers, employees and trustees can be convicted of

Class B or C misdemeanor, considered an offenseinvolving moral turpitude• Conviction of employees and officers results in immediate

removal from office or employment• Conviction of trustee is considered official misconduct

and trustee is subject to removal from office andineligibility for office or employment with another publicentity for 4 years• Contracts awarded in violation are voidable and can be

enjoined by court actionTex. Ed. Code § 44.032

WHAT MUST BE COMPETITIVELY PROCURED?

• “Except as provided by this subchapter . . . “

• “all school district contracts for goods and services,except for vehicle fuel and produce”

• “valued at $50,000 or more in the aggregate foreach 12 month period”

• “shall be made by the method, of the followingmethods, that provides the best value for the district.”

Tex. Ed. Code §44.031(a)

SOLE SOURCE EXCEPTION(1) an item for which competition is precluded because of the existence of apatent, copyright, secret process, or monopoly;

(2) a film, manuscript, or book;

(3) a utility service, including electricity, gas, or water; and

(4) a captive replacement part or component for equipment.”

Tex. Educ. Code § 44.031(j)To be a bona fide exemption to the Texas Education Code District purchasing law requirements, theremust be no other like items available for purchase that would serve the same purpose or function, andonly one price for the product because of exclusive distribution or marketing rights. The fact that aparticular item is covered by a patent or copyright is but one factor in determining if the purchase fallsunder the sole source exemption to the purchase requirements. (�44.031(j)(1), Texas Education Code)

Division of Grants Administration Request for Noncompetitive Procurement (Sole-Source) Approval

Name of Federal Grant

Name of Grantee

Name and Title of Authorized Official

Signature of Authorized Official Date

Complete and submit this form to request prior approval for a noncompetitive, sole-source proposal. Limit one proposal per form. Completion and submission of this form satisfies the requirement in 2 CFR 200.320(f).

This form must be signed by the authorized official. Email this signed form to TEA's chief grants administrator at grants@tea.texas.gov.

Date

Certification

Description of Request

Describe the proposal, and explain the rationale for making it noncompetitive.

County-District #

Signature of Chief Grants Administrator Date

For TEA UseRequest for prior written approval is approved as requested.

Request for prior written approval is approved with the following changes:

Request for prior written approval is denied.

Yes NoDo you have a sole-source verification letter from the proposed vendor?

How many vendors have been contacted for price quotes that led you to determine that there is only a sole source?

List the vendors contacted:

Provide a reason that this procurement is a noncompetitive or sole-source procurement.

EMERGENCY EXCEPTION TO PROCUREMENT

• Contracts for repair or replacement if school equipment, a facility,a part of a school facility or personal property is destroyed,severely damaged, or as a result of an unforeseen catastropheundergoes major operational or structural failure• Board must determine that the delay posed by competitive

procurement would substantially prevent or substantiallyimpair the conduct of classes or other school activities• Required Board actions and approvals can be delegated for

emergency situationsTex. Ed. Code § 44.031(h); 44.0312

What does "valued at $50,000 ormore in the aggregate for each 12-month period" mean?

“IN THE AGGREGATE”

THE STATUTES SAY:The following types of purchases are illegal:

•"Component purchases" - purchases of the component parts of an itemthat in normal purchasing practices would be purchased in one purchase.

•"Separate purchases" - purchases, made separately, of items that in normalpurchasing practices would be purchased in one purchase.

•"Sequential purchases" - purchases, made over a period, of items that innormal purchasing practices would be purchased in one purchase.

Tex. Ed. Code §44.032

THE AG SAYS:

“In the aggregate” means:•A “collection of associated items.”

•“[C]ontracts for like products that a schooldistrict normally would purchase together.”

Tex. Att’y Gen. Op. DM-418

ASK YOURSELF . . .•Do I know that I want to use the same vendor to meetmost or all of my requirements for this category thiscoming year?• Are these purchases already budgeted and accountedfor/planned?• Can I anticipate and estimate quantities and totalexpenditures for the coming year?• Can better pricing be locked-in by aggregating andcompetitively procuring?

• Competitive bidding for goods and services other than constructionservices;• Competitive sealed proposals for goods and services other thanconstruction services;• Request for proposals for services other than construction services;• Interlocal contract;• A method provided by Chapter 2269, Government Code, for constructionservices;• Reverse auction procedure (real time internet bids); or• Formation of a political subdivision corporation.

Texas Education Code § 44.031

CHAPTER 44 SELECTION CRITERIA

“Except as provided by this subchapter,” the District shall consider:

(1) the purchase price;

(2) the reputation of the vendor and of the vendor’s goods or services;

(3) the quality of the vendor’s goods or services;

(4) the extent to which the goods or services meet the district’s needs;

(5) the vendor’s past relationship with the district;

(6) the impact on the ability of the district to comply with laws and rules relating to historically underutilized businesses;

(7) the total long-term cost to the district to acquire the vendor’s goods or services;

(8) bidder/proposer’s in-state residency (discussed ahead); and

(9) any other relevant factor listed in the bid/proposal request.

Tex. Ed. Code � 44.031(b)

“BUY TEXAS” PROVISION

For a contract for goods and services (other thantelecommunications and information services, buildingconstruction or maintenance or instructional materials), theDistrict shall consider, as a scoring factor, whether thevendor’s ultimate parent company or majority owner:

A) has its principal place of business in Texas; orB) employs at least 500 persons in Texas

Tex. Ed. Code 44.031(b)(8)*Not permissible under 2 CFR Part 200

AUTHORIZED DELIVERY METHODS FOR CONSTRUCTION SERVICES• Competitive Bidding (defined project)

• Competitive Sealed Proposals (defined project)

• Construction Manager at Risk (defined project)

• Design-Build (defined project)

• Job Order Contracting or Coop (projects not yet defined; to be determined/assigned later)

• Construction Manager-Agent (defined project(s) or program)

WHAT IS “CONSTRUCTION”?Texas Government Code

•A Public Work Contract is defined as:– “…a contract for constructing, altering, or repairing a public building or

carrying out or completing any public work.”

•“Public work labor” is defined as:– “…labor used directly to carry out a public work.”

Tex. Gov’t Code § 2253.001(4)-(6)

• Case law has clarified that a “public work contract includes both traditionalconstruction and contracts for repair of a building

• Compliance with bonding and prevailing wage laws are mandatory; requirementsfor use of architect or engineers may be triggered

WHAT IS “CONSTRUCTION”?

According to OSHA:

– “Construction work is not limited to new construction. Itincludes the repair of existing facilities. The replacement ofstructures and their components is also considered constructionwork.”

OSHA decision (08/11/1994)

SELECTION CRITERIA FOR CONSTRUCTION CONTRACTS –WEIGHTS MUST BE PUBLISHEDIn determining the award of a contract under Chapter 2269, the District may consider:

(1) Price;

(2) Offeror’s experience and reputation;

(3) Quality of offeror’s goods and services;

(4) Impact on the ability of the governmental entity to comply with rules relating tohistorically underutilized businesses;

(5) Offeror’s safety record;

(6) Offeror’s proposed personnel;

(7) Whether the offeror’s financial capability is appropriate to the size and scope ofproject; and

(8) Any other relevant factor listed in the solicitation

Tex. Gov’t Code § 2269.055

WHAT IS “MAINTENANCE”?• According to OSHA:– “Determinations of whether a contractor is engaged in maintenanceoperations rather than construction activities must be made on acase-by-case basis, taking into account all information available at aparticular site.”– Factors to determine whether a project constitutesmaintenance or construction:• One-for-one replacement (“like for like”)• Scale and complexity of the project, including the amount of time and materialrequired to complete the job

• The physical size of the object being worked onOSHA Letter to Raymond Knobb (11/18/2003)

• True maintenance services are not construction services, and may beprocured under 44.031(a) methods, do not have to use JOC pricing

DURING AN EMERGENCY• Clean-up work (which includes dehumidifying, dewatering, debris removal, and

removal of wet materials, mold remediation) is not "public works" and does not require construction services procurement method, bonding, prevailing wages

• Significant building and restoration work are public works that require use of construction procurement methods (including JOC), prevailing wages and bonding

• Payment bonds are required for public works projects that exceed $25,000 in value

• Performance bonds are required for projects that exceed $100,000 in value

• Prevailing wage laws still apply to public works contracts even in emergency works situations

• Davis Bacon rates ARE NOT required for projects eligible for FEMA public assistance

PROCUREMENT OF TECHNOLOGY • Look at scope of services to determine procurementmethod

• If construction services are sought, include Chapter 2269and PublicWorks requirements

•Hybrid RFPs are a great approach•Determine whether engineering services are required• ALWAYS coordinate with the District’s maintenance andfacilities departments

PROFESSIONAL SERVICES

Which services are really professional services:How do you determine whether to issue anRFP or an RFQ, and why does the differencematter?

TEXAS EDUCATION CODE 44.031(F):PROFESSIONAL SERVICES

• 44.031(f) exempts architect, attorney, certified publicaccountant, engineer, or fiscal agent

• “A school district may, at its option, contract for professionalservices rendered by a financial consultant or a technologyconsultant in the manner provided by Section 2254.003,Government Code, in lieu of the methods provided by thissection.”

TEXAS GOV’T CODE CHAPTER 2254

– Certified Public Accountants

– Architects (including Landscape Architects)

– Engineers

– Land Surveyors

– Real Estate Appraisers

– Physicians, Registered Nurses, Optometrists

• Applies to the professionals and services within the scope of the practice or provided in connection with the professional’s practice

TEA CLARIFICATIONS ON PROFESSIONAL SERVICES

• “Government Code @2254.002(D)(2)(A)(B) clearly defines which professional services may be selected using qualifications rather than competitive bidding. Only these specific professional services written in the code may be procured using the request for qualifications procedures rather than competitive bidding . . . Any professional service provider that is not disclosed in Government Code @2254.002(D)(2)(A)(B) must be procured using the method disclosed in TEC @44.031(a).”

• "Texas AG Opinion DM-418 was based on purchasing law in effect prior to the current GC2254 legislation. It would be an erroneous assertion for a school district to claim the RFQ methodology for certain professional services for professional services not specified in GC2254 . . . Any professional service provider that is not disclosed in Government Code @2254.002(D)(2)(A)(B) must be procured using the method[s] disclosed in TEC @44.031(a)."

Response from Patrick Baker, TEA Financial Compliance Division Auditor, October 2017

SELECTING PROFESSIONAL SERVICE PROVIDERS

•Districts may not select a provider of professional services listedunder Tex. Gov’t Code Chapter 2254 on the basis of competitivepricing•Providers are selected solely based on demonstrated competenceand qualifications; price may only be considered and negotiatedafter selection•Advertising and publishing of a Request for Qualifications ispermissible, but not generally required

WHEN MUST THE RFQ BEADVERTISED AND PUBLISHED?

• Contracts for the design and implementation of energysavings measures guaranteed to offset the cost of themeasures over a specified period

Tex. Ed. Code §44.901(h)

• Selection of a CM-Agent (Program/Project Manager)• Selection of Design-Build Firm/Team• Step One of CM-at-Risk in Two Step Process

Tex. Gov’t Code § 2269

NEED A BREAK?

UNIFORM GUIDANCE2 CFR PART 200

• Purpose of Uniform Guidance is to reduce fraud, waste and abuse in the use of Federal Funds• Applies to Federal Grants awarded to school districts on or after

12/26/14• Applies to direct Federal Grants from U.S. Department of Education• Applies to State (TEA) administered grant programs• Auditors have have already begun verifying school district compliance• Other Federal agencies follow Uniform Guidance of 2 CFR Part 200

WHICH FUNDING SOURCES DOES UNIFORM GUIDANCE EFFECT?

• Title I

• Title II

• Title III

• IDEA – Part B (Special Education)

• 21st Century Community Learning Centers

• Child Nutrition (additional rules apply)

• HUD and Community Development Block Grants

• Perkins (CTE)

• Any other USDE Grant (direct or administered through TEA)

2 CFR PART 200 PROCUREMENT RULES• When using Federal Funds, Districts must use documented procurement procedures thatreflect applicable State and local laws and regulations, “provided that the procurementsconform to applicable Federal law and the standards identified in this part.” 2 CFR 200.318

• “All procurement transactions must be conducted in a manner providing full and opencompetition consistent with the standards of this section, in order to ensure objectivecontractor performance and eliminate unfair competitive advantage.” 2 CFR 200.319

• Districts must use the method of procurement required based on the dollar threshold for theacquisition of supplies or services.

• Recent TEA Guidance created some confusion about aggregation, discussions with TEApending.

IMMEDIATE COMPLIANCE STEPS FOR ALL NON-FEDERAL ENTITIES

ü Create Policies and Procedures reflecting Federal, State and Local procurement requirements

ü Create Conflict of Interest Policy for all Vendors Paid with Federal Funds, and obtain Conflicts of Interest Forms (regardless of contract amount)

ü Include Written, Mandatory 2 CFR Part 200 Contract Certifications in Contracts with all Vendors paid with Federal Funds (regardless of contract amount)

ü Revise Procurement Procedures for all contract value categories, to be implemented no later than start of Fiscal Year 2018

• Violations can result in debarment of vendor, suspended grant payments, revocation of federal funding, or denial of future federal funds; certain deficiencies are subject to mandatory audit findings and reporting

TEA FAQS: RENEWALS AND EXTENSIONS

• 7.34 How does the subrecipient handle multi-year contracts that are in place which may not have followed the new rules since they were signed before the new regulations took effect?

• Response:

• TEA will consider [the grace period] to be transition years. The subrecipient may continue the contract for this school year, but should ensure its contracts are compliant with the most restrictive rules or regulations before the next year. This may require new procurements that follow the new regulations.

GRANTS AND CONTRACT DATES• When using grant funds, contracts are limited to the funds specified in the Notice of Grant Award

(“NOGA”). Contracts with vendors are not effective until the NOGA is issued.• Districts can enter into Letters of Intent with the vendors before and execute a final vendor

contract after the NOGA is issued.• Letter of Intent—should state that the future contract is contingent on receiving the NOGA.• Final Contract must . . .

1. Align the contract period with the grant period (a.k.a. the services will be performed and completed during the contract/grant period).

2. Require services to be invoiced monthly (not a lump sum) and paid upon verification that received services.

3. Follow 2 CFR Part 200 regulations.4. Identify specific funding source.

5. Identify the reasonable, necessary, and allocable services to be provided.6. Comply with the regulations for charging administrative costs to the grant (if applicable)7. Require the vendor’s invoices to include a list of services provided, dates of service, location of

service during that billing period.

REQUIRED CONTRACT CERTIFICATIONS• Should include all requirements contained in 2 CFR 200, Appendix II

• Include with solicitation as a required submission

• If no competitive procurement; include with contract

• Request copy through cooperatives

ETHICS & CONFLICTS OF INTEREST• 2 CFR § 200.318(c)(1) – The non-Federal entity must maintain written standards of conductcovering conflicts of interest and governing the actions of its employees engaged in theselection, award, and administration of contracts. No employee, officer, or agent mayparticipate in the selection, award, or administration of a contract supported by aFederal award if he or she has a real or apparent conflict of interest. Such a conflictof interest would arise when the employee, officer, or agent, any member of his/herimmediate family, his/her partner, or an organization which employs or is about to employany of the parties indicated herein, has a financial or other interest in or a tangiblepersonal benefit from a firm considered for a contract. The officers, employees, andagents of the non-Federal entity may neither solicit nor accept gratuities, favors, oranything of monetary value from contractors or parties to subcontracts. However,non-Federal entities may set standards for situations in which the financialinterest is not substantial or the gift is an unsolicited item of nominal value. Thestandards of conduct must provide for disciplinary actions to be applied for violations ofsuch standards by officers, employees, or agents of the non-Federal entity. 37

6 AFFIRMATIVE STEPS REQUIRED UNDER 2 CFR PART 2001. Placing qualified small and minority businesses and women's business enterprises on solicitation

lists;

2. Assuring that small and minority businesses, and women's business enterprises are solicited whenever they are potential sources;

3. 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;

4. Establishing delivery schedules, where the requirement permits, which encourage participation by small and minority businesses, and women's business enterprises;

5. 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

6. Requiring the prime contractor to take the affirmative steps listed above when subcontracting (insert into the contract or certifications)

HIRING RESTORATION AND DEBRIS REMOVAL VENDORS—CONTRACTUAL PROTECTIONS

• Require vendors to provide either a lump-sum total (if possible) or unit prices or rates for labor and materials, equipment use/rental

• FEMA favors lump-sum contracts over time and material contracts; however, if using a time-and-materials contract, it must include a “not-to-exceed” amount (amend as you go, if needed)

• Require vendors to submit itemized invoices for materials and equipment/rentals, as well as payroll and timesheet backup for workers

• Ensure that choice of law and venue provisions are local

• Include mandatory certifications required under federal procurement laws to ensure FEMA reimbursement (2 CFR Part 200 Appendix II) TASBO AND LEGAL COUNSEL HAS EXAMPLES

FEMA’S POSITION•When soliciting multiple quotes, one of the three mustbe from a minority-owned or woman-owned business

• Prime contractors must be able to demonstrate that ittook “6 affirmative steps” when selecting sub-contractorsor sub-consultants

• If using a cooperative vendor, cooperative must be ableto demonstrate that it took ”6 Affirmative Steps” whenprocuring and awarding contracts

PURCHASING CATEGORIESMicro-

Purchases:Up to $10,000

SmallPurchases:$10,001-$49,999

$50,000 –$249,999

Purchases at or above $250,000

One Quote

Multiple Quotes

State Purchasing Procedures consistent with 2 CFR Part 200

2 CFR Part 200

RULES FOR EXPENDITURES UP TO $10,000“MICRO-PURCHASES”

•May be awarded without soliciting competitivequotations if nonfederal entity considers the cost“reasonable”

•To the extent practicable, District must distributemicro-purchases equitably among qualified suppliers

RULES FOR EXPENDITURES BETWEEN $10,001 AND $49,999“SMALL PURCHASES”

• Must obtain price or rate quotes from an “adequate number ofqualified sources” (3 minimum)

– This procedure is not required under Texas law when using non-Federal Funds

• Advertising not required• Vendors must execute 2 CFR Part 200 contract certifications

RULES FOR EXPENDITURES BETWEEN $50,000 AND LESS THAN $250,000

(DEFAULT TO STATE RULES)

• TEA advises Districts to follow state procurement rules, to the extent consistent with 2 CFR Part 200

– Chapter 44.031 methods and procedures

– In event of conflict, must use most restrictive rule if using Federal Funds

• Vendors must execute 2 CFR Part 200 contract certifications

FEDERALLY-FUNDED EXPENDITURES AT OR ABOVE $250,000

Permissible Procurement Methods:

• Advertised Request for Sealed Bids

• Advertised Request for Competitive Proposals (RFP)

• Qualifications Based Procurements (RFQ), where price is not a factor, may only be used for the procurement of Architectural and Engineering Services (2 CFR 200.320(d)(5))

EXCEPTIONS TO COMPETITIVE PROCUREMENT FOR PURCHASES AT OR ABOVE $250,000

“Procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when one or more of the following circumstances apply:

(1) The item is available only from a single source;

(2) The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation;

(3) The Federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request from the non-Federal entity; or

(4) After solicitation of a number of sources, competition is determined inadequate.”

2 CFR 200.320(f)

Caution: Under Federal Law, Sole Source is RARELY Justified

COST VERIFICATION PROCEDURES REQUIRED (EXPENDITURES AT OR ABOVE $250,000)

• Prior to Procurement/Contract:

– The District must prepare an “Independent Estimate” form to document the range of fair and reasonable costs estimated for the goods and/or services

– District must create form and keep it in the contract/procurement file for federal audit

• Following Procurement/Contract:

– The District must prepare a “Cost Analysis” or “Price Analysis” form to document that each selected vendor’s offered price was fair and reasonable

– District must create forms and keep them in the contract/procurement file for federal audit

• In circumstances where non-competitive procurement is permitted, the vendor’s profit must be negotiated and disclosed as a separate element of contract price. 2 CFR 200.323(b)

REQUIRED PROCUREMENT STEPS AT OR ABOVE $250,000

Independent Estimate

Solicit or Negotiate

Cost or Price Analysis

Obtain EDGAR

Certifications

Award/ Execute Contract

INDEPENDENT ESTIMATE DETERMINATION FORM(AT OR ABOVE $250,000 ONLY)

How much do you think this will cost?

• The District must prepare an independent estimate beforesoliciting or negotiating contracts at or above $250,000

• Independent Estimate Determination form documents theDistrict’s due diligence and estimated range of fair andreasonable costs for the goods and/or services

• Create a form and keep it in the contract/procurement file.

Complete beforesoliciting or negotiating

contracts

DETERMINATION OF COST OR PRICE ANALYSIS FORM(AT OR ABOVE $250,000 ONLY)

How close were you?

• A District must conduct a cost or price analysis after receiving vendor responses for procurements at or above $250,000.

• Determination of Cost or Price Reasonableness form documents that the offered price was fair and reasonable.

• Separate form for each vendor recommended for contract award!

• Create a form and keep it in the contract/procurement file.

Complete after soliciting or negotiating but before

awarding contract

COST ANALYSIS OR PRICE ANALYSIS?“Cost Analysis” required if no price competition:

q Sole Source Purchases

q Emergency Procurements

q Procurements where only one bid/proposal is received

q Professional Services permitted under 2 CFR Part 200

q Price adjustments to previous purchase orders or contracts

q Extensions of existing contracts past the initial term

COST ANALYSIS REQUIREMENTSIf a Cost Analysis is required, separate cost elements must be documented, andBuyer must also negotiate and document profit as a separate element. Toestablish a fair and reasonable profit, the Buyer must consider the all of thefollowing:

• the complexity of the work to be performed• the risk borne by the vendor• the vendor’s investment• the amount of subcontracting• the quality of the vendor’s record of past performance• industry profit rates in the surrounding geographical area for similar work

PRICE ANALYSIS REQUIREMENTS• Price Analysis evaluates the fairness and reasonableness of the total

lump sum price, and can be used only if:– Purchase price was competitively procured in accordance with law; or

– More than one bid or proposal was received.

Note: Cannot be used if competitive process was an RFQ process (noprice)

COOPERATIVE PURCHASES• TEA – New FAQ re use of Purchasing Co-ops – July 2, 2015:

– Question: Under the new EDGAR regulations, are LEAs allowed to purchase items from our existing purchasing cooperatives or must we follow the new regulations and make individual procurement decisions for each item that we would normally purchase from a purchasing cooperative?

– Response: 2 CFR 200.318(e) encourages non-federal entities to enter into state and local intergovernmental agreements or inter-entity agreements where appropriate for procurement or use of common or shared goods and services in order to foster greater economy and efficiency. State and federal procurement rules must be followed by the purchasing cooperative the same as if the local LEA made the procurement. Once it has been verified that the purchasing cooperative has followed the most restrictive of the state or federal procurement rules (see question 53 for detail) the LEA may purchase goods and services from the purchasing cooperative directly without any additional procurement activities or documentation.”

http://tea.texas.gov/Finance_and_Grants/Grants/Administering_a_Grant/The_New_EDGAR/

EFFECT ON COOPERATIVES• “State and federal procurement rules must be followed by the purchasing

cooperative the same as if the local LEA made the procurement.”

– Coops must follow Uniform Guidance when procuring goods/services

– Independent Estimate

– Cost/Price Analysis

– 6 Affirmative Steps

– Vendor Certifications

EFFECT ON COOPERATIVES• “Once it has been verified that the purchasing cooperative has

followed the most restrictive of the state or federal procurement rules…the LEA may purchase goods and services from the purchasing cooperative directly without any additional procurement activities or documentation.”

– Verification?

• Cooperative members may request compliance docs (including independent estimate and cost/price analysis forms, vendor’s certifications, etc.) to verify cooperative’s compliance with 2 CFR Part 200

EFFECT ON COOPERATIVESAdditional documentation required of District?

• When circumstances necessitate separate evaluation of lump-sum pricing, the District may also wish to conduct an independent evaluation of cost/price reasonableness of the cost/price of the particular purchase.

v If lump-sum price includes goods or services for which Coop could not have performed a cost or price analysis, Districts should consider conducting an independent cost or price analysis.

v Total lump-sum price may include charges for goods and/or services that were not or could not have been submitted to Coop for review at the time proposals were submitted and a contract was awarded between Coop and the vendor.

• When using federal funds at or above $250,000 under Coop contracts that were awarded prior or during grace period, think twice. FEMA issues guidance post-Harvey rejecting cooperatives that were not 2 CFR Part 200 compliant.

WHAT IS STILL UNCLEAR?• How federal auditors will approach “aggregation” for dollar thresholds

– Per contract?

– Per vendor?

– Per commodity or service?

– Per contract/vendor seems most safe

– TEA recent guidance has added to the confusion

• Whether the 2 CFR Part 200 mandate for multiple price quotes and price competition trumps the state law prohibition against competing certain professional service providers on the basis of price (per Tex. Gov’t Code 2254.003)

CHILD NUTRITION• TDA has apparently not yet adopted the higher micro-purchase and simplified acquisition thresholds permittedunder June 20, 2018 OMB Memorandum

• EDGAR and USDA provisions are mostly compatible, butwhen in conflict, USDA regulations trump EDGAR forCNP funded purchases

GEOGRAPHIC AND LOCAL PREFERENCES• Must follow Buy American: SFAs much purchase domestic commodities or products to the

maximum extent practicable

– an agricultural commodity produced in the United States; and

– a food product that is processed in the United States substantially using agricultural commodities that are produced in the United States

• Exceptions:

– A product is not produced or manufactured in the U.S. in sufficient and reasonable available quantities of a satisfactory quality; or

– Competitive bids reveal the costs of a U.S. product are significantly higher than the foreign product.

• Optional geographic preference permitted for the procurement ofunprocessed locally grown or locally raised agricultural products for use in a Child NutritionProgram

QUESTIONS?