This Procurement Policy for Federal Grants applies to all expenditures of monies received through federal grants, whether those monies 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 monies.
Federal law imposes particular requirements on the use of federal grants. This Procurement Policy is designed to ensure that Hood College (“Hood”) 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 Grants and Accounting Offices to ensure compliance with the requirements of each grant.
Failure to comply with federal requirements can result in a variety of adverse consequences, ranging from denial of reimbursement to debarment of Hood from all federal funding, including federal student aid. In certain circumstances, criminal charges may also be brought. Therefore federal requirements must be scrupulously observed.
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.
II. Ethics and Conflicts of Interest
A. Hood Personnel
All research and grant-funded programs must comply with applicable law, regulations, College policies, and professional best practices. Reports must be complete, accurate, and truthful.
All individuals involved in expenditure of federal grant monies must avoid any actual or apparent conflict of interest. Such individuals 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 Hood’s behalf are thereby disqualified from bidding on those opportunities. While such contractors or consultants are not automatically disqualified from other opportunities, care must be taken to ensure that their work for the College does not give them unfair advantage over competitors.
Hood personnel may not accept kickbacks, “rebates,” gratuities or other “gifts” or “tokens of appreciation” from vendors. Rebates and discounts to Hood are permitted provided they:
- Comport with all applicable law;
- Provide a direct benefit to Hood;
- Result from an arm’s-length negotiation, which is fully documented in the file; and,
- Are consistent with vendor’s standard pricing or discounting policies.
Vendors or suppliers who offer inappropriate benefits or rewards to individual Hood employees shall immediately be reported to the Grants Office.
B. Suppliers or Bidders
To avoid conflict or the appearance of conflict, contractors or consultants who prepare specifications, statements of work or other material portions of requests for proposal shall be excluded from bidding on the underlying work. As with natural persons, parent, subsidiary and affiliated companies must also be excluded. Hood will not accept bids based upon anti-competitive pricing or practices.
III. Procurement Processes
Federal regulations place great emphasis on securing the best value for each federal dollar and on promoting free and open competition. Consequently, all purchases using federal funds require a cost/price analysis and documentation showing that more than one vendor was considered. The detail of the analysis and documentation required increases with the amount spent. As a general principal, Hood is responsible for the efficient and effective administration of Federal grants through sound management practices.
Hood may not earn or keep any profit resulting from Federal monies, unless such is expressly permitted by the terms of the grant.
Costs must be reasonable, allowable and allocable. A cost is “reasonable” if it is one a reasonable person would incur in the circumstances, after appropriate market research and price analysis.
B. Allowable Costs
“Allowable” costs must:
- Be necessary and reasonable for the performance of the Federal award and be allocable to that award.
- Duplicative or unnecessary purchases are not “allowable” and are not eligible for reimbursement from Federal grant monies.
- Conform to any limitations set forth in this Policy or in the grant. Consult the Grants Office regarding additional requirements attached to particular grants.
- Be recorded and classified in a consistent treatment. For example, costs that are classified as indirect outside the context of a Federal grant may not be classified as direct costs when applied to a Federal grant.
- Be determined in accordance with generally accepted accounting principles (“GAAP”).
- Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period.
- Be properly documented. Required documentation is detailed in Section III. H.
Whenever appropriate, the costs of leasing versus purchasing must be considered.
Principal Investigators, not the Grants Office, are responsible for ensuring that grant expenditures are accounted for in a complete, timely, and accurate manner.
C. Account Codes and Expenditures
Account codes are used to classify and accurately track expenses and expenditures. Use of account codes is also required by Federal law and regulation. Account codes are furnished by the Accounting Office. Principal Investigators are responsible for the consistent and accurate use of account codes.
Grant expenditures are processed like all other College expenditures. The invoice or check request is received by Accounting and forwarded to the appropriate project director for review, account coding, and initial approval. Final payment authorization is required by a vice president, the President, or, in some cases, the Controller. Once the approved invoice is submitted to Accounting, it is processed for payment according to the vendor payment terms.
Reimbursements for grant expenses are requested by the Controller using the applicable funding request system. For federal grants, most reimbursement requests are made using the agency’s web-based grant management system. In a few cases, hard copy invoices are required.
Federal grant expenditures are reported each fiscal year in the Schedule of Federal Awards that is included in the annual single audit report required under Uniform Guidance (formerly Circular A-133).
D. Allocable costs
A cost is “allocable” to the extent that it provides a benefit to the project for which the grant was awarded. If there is no benefit, the expense is not “allocable.” If an expense is not “allocable,” it is automatically not “allowable” and cannot be paid for from grant funds.
Costs charged to Federal grants shall be the actual cost incurred by Hood and shall therefore reflect any credits or discounts obtained by the College.
If a cost benefits more than one project, but the proportion of benefit to each cannot be determined because of the interrelationship of those projects, then the cost may be allocated between those projects on any reasonable basis, with proper documentation as to how and why the allocation was made.
If a grant specifically authorizes the purchase of equipment or other capital assets, those costs shall be allocated to that grant, regardless of what use is made of such equipment or asset after its original purpose is completed. “Indirect” costs, such as maintenance and depreciation are discussed in the Section III. E, below.
In general, costs allocable to one grant may not be charged to any other Federal grant to overcome fund deficiencies or any other reason. In certain instances, however, shifting costs under two or more Federal grants is allowed. Cost shifting between Federal grants is not permitted without the prior, written approval of the Vice President for Finance and Treasurer.
Whenever Cost Accounting Standards apply, those standards shall take precedence over the allocation principles above. Consult the Grants Office for guidance.
When in doubt regarding the reasonableness and allocability of any costs, consult the Grants Office.
Certain grants may be subject to statutory limits on allowable costs. In those cases, costs that exceed that limit may not be charged to the grant.
Any payments made for costs determined to be unallowable must be returned (with interest) to the granting agency.
E. Indirect (Facilities and Administration) Costs
Indirect (F&A) costs must be classified as “Facilities” or “Administration.”
- “Facilities” means depreciation on buildings, equipment and capital improvement, interest on debt associated with certain buildings, equipment and capital improvements, and operations and maintenance expenses. Library expenses are “Facilities” costs.
- “Administration” means general administration and general expenses such as the Grants Office, accounting, personnel and other indirect costs not defined above as “Facilities” costs.
Indirect costs may be allocated to a grant only if they provide a benefit to that specific grant program.
Individual grants may set forth specific requirements relating to reimbursement of indirect costs, matching or cost sharing. Please consult the Grants Office for additional guidance.
Federal law requires periodic reports detailing the use of grant monies. These reports, as well as vouchers requesting payment, must be certified in writing by Principal Investigators. The required certification reads:
“By signing this report, I certify to the best of my knowledge and belief that the report is true, complete, and accurate, and the expenditures, disbursements and cash receipts are for the purposes and objectives set forth in the terms and conditions of the Federal award. I am aware that any false, fictitious, or fraudulent information, or the omission of any material fact, may subject me to criminal, civil or administrative penalties for fraud, false statements, false claims or otherwise. (U.S. Code Title 18, Section 1001 and Title 31, Sections 3729-3730 and 3801-3812).”
Note that errors, omissions or falsehoods may result in personal liability, including criminal prosecution.
Price analysis is a comparison of prices offered by qualified vendors competing in the open market. Price analysis may be as simple as “comparison shopping” prices for standard goods published by a number of vendors or as complicated as written bids submitted in response to a detailed request for proposal.
H. Purchasing Guidelines
- Micro Purchases (Less than $3,500 or $2,000 in the case of acquisitions for construction contracts subject to the Davis-Bacon Act). Purchases under $3,000 are typically standardized goods or services available from many sources. Such purchases do not require competitive bidding or detailed documentation. However pricing should be obtained from more than one supplier and this research should be documented in the file. Whenever practicable, micro purchases should be distributed equitably among qualified suppliers.
- Small Purchases (Over $3,500 but Less Than the “Simplified Acquisition Threshold”). Purchases larger than $3,500, 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. All requests for proposals shall identify Hood as an Equal Opportunity Employer and require the same certification from suppliers.
Minimum acceptable documentation consists of requests for proposal issued, responses received and criteria used for final selection. There is no requirement that contracts be awarded solely on the basis of price (i.e. to the lowest bidder). Other considerations, such as vendor’s experience in the field or quality of products or services offered, may justify a higher price. Those reasons must be documented in the transaction file, however.
Consult the Grants Office if special circumstances arise (e.g., only one suitable supplier exists).
- “Simplified Acquisition Threshold” Purchases (Currently $150,000 or Greater). Purchases larger than $150,000 must comply with one of the following procurement procedures:
a. 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.
Sealed bidding is appropriate in the following circumstances:
- 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 publicly 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.
b. Competitive Proposals - Competitive proposals must be used when sealed bids are not appropriate. When competitive proposals are used, the following requirements apply:
- Request for Proposal process (RFPs) must be publicized
- The RFP must identify all evaluation factors and each factor’s relevant importance
- Proposals must be solicited from two or more responsible bidders
- Proposals received must be evaluated based on the criteria in the RFP
- Award of the contract is made to the responsible firm whose proposals is “most advantageous to the program, with price and other factors considered”
The Principal Investigator shall establish a written method for conducting technical evaluations of the proposals received and for selecting recipients before the bidding opportunity is announced. Technical specifications shall be provided to the granting or pass-through agency upon request.
c. 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; or
- After solicitation of a number of sources, competition is determined to be inadequate.
All procurement transactions must be conducted in a manner providing full and open competition. Requirements or practices that impede or obstruct such competition are not permitted and may result in disciplinary action, including termination of employment.
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.
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.
Specifications or requirements that artificially limit competition are not permitted.
V. General Requirements
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).
Principal Investigators are responsible to ensure contractor performance in accordance with their contracts or purchase orders.
- 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.
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 leader 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.
Hood shall take all necessary affirmative steps to assure that minority businesses, women's business enterprises, and labor surplus area firms are used when possible.
Hood College is a private institution and reserves the right to select with whom it transacts business to the extent permissible by law in order to maintain and in accordance with its mission. 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 Hood.
VI. Mandatory Contract Provisions
Each grant may require that contracts funded by that grant contain certain provisions that apply only to that grant. To ensure compliance, Hood uses contract forms provided by the Federal Demonstration Partnership for subawards and contracts. Required terms are discussed here to provide users with a basic understanding of these provisions.
Contracts that exceed the Simplified Acquisition Threshold must provide remedies that protect Hood in the event contractor fails to perform as required by the contract. These remedies may include sanctions, liquidated, actual and/or realized damages, or penalties levied upon the contractor. Please consult the Grants Office for assistance.
Contracts that exceed $10,000 must permit Hood to terminate for cause, and for convenience, and must include a mechanism for calculating the amounts due the contractor in the event of such termination. Please consult the Grants Office for assistance.
Contractor must certify that it is an “Equal Opportunity Employer.”
B. Davis-Bacon Act.
The Davis-Bacon Act applies to construction contracts in excess of $2,000. It requires contractors to pay laborers and mechanics wages not less than the “prevailing” wage, as determined by the Secretary of Labor.
- Each bid solicitation published by Hood must contain the current prevailing wage determination.
- Any award of the contract must be conditioned on contractor’s acceptance of that wage determination.
- Suspected or reported violations of the Davis-Bacon Act shall be immediately reported to the Federal awarding agency.
C. Copeland “Anti-Kickback” Act
The Copeland “Anti-Kickback” Act also applies to construction contracts in excess of $2,000. It prohibits “kickbacks” in construction contracts funded with Federal monies.
- Contractors and subcontractors (sometimes referred to as “subrecipients”) shall be prohibited from inducing any person employed in the construction, completion, or repair of public work, to give up any part of the compensation to which he or she is otherwise entitled.
- Suspected or reported violations shall be immediately reported to the Federal awarding agency.
D. Construction Contract Work Hours and Safety Standards Act
Construction contracts in excess of $100,000 shall require that the wages of mechanics or laborers comply with Federal law; including:
- Wages of mechanics and laborers shall be computed on the basis of 40 hours of work per week; and,
- Work in excess of forty hours per week shall be paid at a rate at least 1.5 times the basic hourly rate.
In addition, contractors shall be prohibited from requiring laborers or mechanics from working in surroundings or under conditions that are unsanitary, hazardous or dangerous.
E. Rights to Inventions Made Under a Contract or Agreement.
Federal law permits institutions of higher learning to claim title to inventions or discoveries that result from research funded by Federal grants. Any subcontracts or sub-awards that Hood may issue using Federal funds must offer that same opportunity to the sub -recipient. Hood and/or its sub-recipients may claim title to their discoveries and inventions by following procedures set forth in Federal statute and the terms of the applicable grant.
If Hood or the sub-recipient decline to take title, title passes to the granting agency. If that agency waives its claim to title, title vests in the individual inventors or discoverers.
Principal Investigators are responsible for providing granting agencies and the Grants Office with timely notice of patentable inventions and discoveries, for protecting such inventions and discoveries against unauthorized use or disclosure and for training their personnel in the importance of timely disclosure of all inventions or discoveries. Decisions as to whether Hood will or will not take title to any invention or discovery will be made by the Office of the Provost, in consultation with other appropriate units of the College.
F. Clean Air and Water
Contractor shall be required to comply with all applicable standards, orders or regulations issued pursuant to the Clean Air Act and the Federal Water Pollution Control Act.
Principal Investigators shall report observed or suspected violations to the Grants Office, which shall advise the grant awarding agency and the Regional Office of the Environmental Protection Agency.
G. Energy Efficiency
Contractor shall be required to meet all applicable federal energy conservation and efficiency standards pursuant to the Energy Policy and Conservation Act (42 U.S.C. 6201).
H. Debarment and Suspension
Contracts funded with Federal grant monies may not be awarded to contractors that have been debarred or suspended from receiving Federal monies pursuant to the Federal Excluded Parties List System.
I. Byrd Anti-Lobbying Amendment
Contractors that apply or bid for an award of $100,000 must certify that they have not used Federal funds to pay any person or organization for influencing or attempting to influence an officer or employee of any agency, a member of Congress, officer or employee of Congress, or an employee of a member of Congress in connection with obtaining any Federal contract, grant or any other award.
VII. Bonding requirements
Unless the granting agency has made a separate determination accepting Hood’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 Maryland.
VIII. Monitoring and reporting program performance
Principal Investigators, not the Grants Office, are responsible for oversight of activities supported by Federal grant monies. Principal Investigators must monitor activities under Federal awards to ensure, i) compliance and, ii) that performance expectations are being achieved.
Principal Investigators are responsible for the timely completion of all required reports. As a general rule, such reports are required at least annually, and no more frequently than quarterly.
Performance reports shall be submitted using Federally approved forms and standards. Please consult Grants Office for assistance in obtaining these forms or interpreting the applicable standards. Current Federal standards require that reports provide:
- A comparison of actual accomplishments to the objectives of the Federal award.
- The reasons why established goals were not met, if appropriate.
- Additional pertinent information including, when appropriate, analysis and explanation of cost overruns or high unit costs.
IX. Significant developments
Events may occur between the scheduled performance reporting dates that have significant impact upon the supported activity. In such cases, Hood must inform the Federal awarding agency or pass-through entity as soon as the following types of conditions become known:
- Problems, delays, or adverse conditions which will materially impair the ability to meet the objective of the Federal award. This disclosure must include a statement of the action(s) taken, or contemplated, and any assistance needed to resolve the situation.
- Favorable developments which enable meeting time schedules and objectives sooner or at less cost than anticipated or producing more or different beneficial results than originally planned.
X. Record Retention and Access
Financial records, supporting documents, statistical records, and all other records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report. For Federal awards that are renewed quarterly or annually, however, records must be maintained from the date of the submission of the quarterly or annual financial report, respectively. The only exceptions are the following:
- If any litigation, claim, or audit is begun before the expiration of the three-year period, the records must be retained until all litigation, claims, or audit findings involving the records have been resolved and final action taken.
- The three-year retention period may be extended by notice from the Federal granting agency or any other agency having oversight authority.
- Records for real property and equipment acquired with Federal funds must be retained for three years after final disposition of that property or equipment.
- The three year retention requirement does not apply when records are transferred to or maintained by the Federal awarding agency or pass-through entity.
- When the grant requires Hood to report program income after the period of performance, the retention period starts from the end of the non-Federal entity's fiscal year in which the program income is earned.
The following apply to indirect cost rate computations or proposals, cost allocation plans, and any similar accounting computations of the rate at which a particular group of costs is chargeable:
- If the proposal, plan, or other computation is required to be submitted to the Federal government (or to the pass-through entity) to form the basis for negotiation of the rate, then the three-year retention period for its supporting records starts from the date of such submission.
- If the proposal, plan, or other computation is not required to be submitted to the Federal government (or to the pass-through entity) for negotiation purposes, then the three-year retention period for the proposal, plan, or computation and its supporting records starts from the end of the fiscal year (or other accounting period) covered by the proposal, plan, or other computation.
B. Methods for collection, transmission and storage of information.
Records shall be maintained in open and machine readable formats, rather than in proprietary formats or on paper.
C. Access to records.
Records relating to programs funded with Federal monies shall be available to the Federal awarding agency, or any other Federal oversight agency, upon request. This provision includes timely and reasonable access to Hood’s personnel for inquiry related to such records.
Consult the Grants Office for guidance regarding the appropriate response to any Federal request for access.
XI. Project Closeout
The following timetable applies to all projects funded by Federal grants unless:
- The grant itself sets forth another schedule; or,
- The granting agency agrees to extension(s) of this timetable.
The project leader shall submit, no later than 90 calendar days after the project end date, all financial, performance, and other reports required by the terms of the grant.
All obligations under the grant shall be liquidated within 90 days of the project end date.
Any funds advanced by the granting agency, but not spent in performance of the grant project, shall be refunded to the granting agency.
The Principal Investigator shall account for the disposition of any real or personal property acquired with Federal funds or received from the Federal government as part of the grant project.
The closeout of a Federal award does not affect the right of the awarding agency to disallow costs and recover funds through audit or other review.
XII. Consequences of Noncompliance
Noncompliance can result in a variety of adverse consequences for Hood, 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 debarment of Hood from participation in Federally funded programs.
- Withholding of further Federal funding.
- Suit to recover funds paid for non-compliant activity(ies).
- Criminal prosecution.
Noncompliance with this policy can have a variety of adverse consequences for Hood, 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. In addition, violation of Federal requirements may expose an individual to civil and criminal prosecution.