UPDATE – The simplified acquisition threshold has been amended since this blog was written. See the blog post titled for more details.
One of the big changes under the Uniform Guidance procurement standards is the requirement that non-federal entities use one of the approved methods of procurement whenever buying goods and services with federal funding. One of those methods, competitive proposals, has a number of requirements that grant recipients need to follow to comply with the UG standards.
Definition of Competitive Proposals
A competitive proposal can be used for any size procurement; however, it is one of two approved methods non-federal entities can use when the aggregate amount of federal funds being spent exceeds the Simplified Acquisition Threshold (currently set at $150,000). The other approved method for these larger, competitive solicitations is the Sealed Bid.
Competitive proposals are preferred under the Uniform Guidance procurement standards when conditions are not appropriate for sealed bids. “Conditions not being appropriate” generally occurs in one of two situations:
- a complete, adequate, and realistic specification or purchase description is not available, and/or
- price is not the primary factor for selecting a winning bidder.
We find that the second situation – price is not the primary factor – is common in competitive solicitations. This is especially true when procuring technology or services as many factors can come into play including industry focus, subject matter expertise, and ability to meet project timelines. However, it is also possible that competitive proposals and sealed bids go hand-in-hand in larger procurements when it makes sense.
Here’s an example.
An organization may receive federal funds for the construction of a new building and, as a first step in the process, need to to hire an architectural firm to design the building. Given the various factors that play into selecting that firm, it would certainly be appropriate to use a competitive proposal process to solicit several qualified architectural firms and then make a selection based on the most qualified response and not necessarily the one with the lowest cost. Once the design is complete and there are very clear specifications in place, it may be appropriate to then use the sealed bid method to solicit bids for the actual construction of the building.
Winning bidders under the competitive proposal procurement method can be awarded either a fixed-price or cost-reimbursement type contract. The method you select should be driven what is most appropriate and feasible given the specifics of the procurement.
Specific Requirements for Competitive Proposals
- The following requirements apply if the competitive proposals method is used:
- Requests for Proposals (RFPs) must be made publicly available.
- The RFP must identify all evaluation factors along with their relative importance in the selection process.
- The non-Federal entity must have a documented method for how they will conduct technical evaluations of the proposals received and for the selection of recipients.
- Contracts must be awarded to a responsible firm whose proposal best meets the pre-determined evaluation factors. Note that “price” is not the deciding factor here.
- Proposals must be considered from an adequate number of qualified sources. It is up to your organization to determine how many proposals is adequate.
- Any response to publicized requests must be considered to the maximum extent possible.
One other area mentioned in the procurement standards is that organizations may use the competitive proposals method to choose architectural/engineering (A/E) services where competitors’ qualifications are evaluated and the most qualified firm is selected, subject to negotiation of fair and reasonable compensation. The procurement of A/E services is the only type of procurement where price doesn’t have to be a selection factor at all.
Other Procurement-Related Considerations
Some other key considerations include the following:
- There can be no conflicts of interest by employees, officers or agents who are engaged in the selection, award and administration of the contract with the winning bidder.
- A contract can only be awarded to a responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement. It’s important that you perform the appropriate level of due diligence to consider such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources.
- The contractor cannot be on the System for Award Management (SAM) exclusion list.You must maintain a history of the procurement process that should include, at a minimum, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.
- The process must be conducted in a manner providing full and open competition consistent with the standards of §200.319 – Competition.
- You must take all necessary affirmative steps to assure that minority businesses, women’s business enterprises, and labor surplus area firms are used when possible.
- You must perform a cost or price analysis if the procurement in excess of the Simplified Acquisition Threshold (currently $150,000), including contract modifications.
- The contract that is ultimately awarded to the winning bidder must contain the applicable provisions described in Appendix II to Part 200—Contract Provisions.
Competitive proposals are a frequently used method by many federal grant recipients. The use of common forms and templates such as RFP templates and proposal scorecards are going to be critical to ensuring compliance and consistency across the organization.
Author: Tom Rogers
Job Title: CEO
Organization: Vendor Centric
Tom is the founder and CEO of Vendor Centric, he has been a trusted advisor to nonprofit organizations for 30 years, with a focus on helping them align the right people, processes and systems to mitigate third-party risk and drive more value from third-party contracts and relationships.