Multifamily Housing Program Financial Management Toolkit

6d. Categories of Procurement (200.320)

How Are Procurement Categories Differentiated?

Procurement requirements now fall essentially into two categories: ‘small purchases’ and ‘substantial goods, services and property.’

  • Most grantees and sub-recipients use grant funds to procure such ‘small purchases’ as office equipment or janitorial services, which do not exceed the small purchase acquisition threshold of $150,000 (41 U.S.C. 403(11)). These purchases require fairly simple procurement procedures and documentation. The organization needs to obtain and compare price or rate quotations from more than one qualified source, such as a service provider or supply catalog. It is important to refer to 200.318 and 200.319 to discern when a sealed bid competition is required and when non-competitive procurement is acceptable.
  • For more substantial contracts for services or goods, procurement procedures must follow more rigorous standards. For example, grantees and sub-recipients need to adhere to requirements for such procurement methods as competitive, sealed bids and non-competitive (sole-source) bids. They need to include various contract provisions such as compliance with equal employment opportunity requirements, termination for cause, reporting requirements, etc. They also need to determine whether bidders are on the Federal list of parties that are barred from receiving Federal funds, and they are not allowed to enter into contract agreements that are considered ‘cost plus’ contracts.

Grantees and sub-recipients must use the applicable procurement process to secure a contract with an entity that will provide goods or perform specific tasks. However, the entity itself is not further subject to the federal procurement rules as it carries out its work to provide the contracted goods or services.

Appropriate contract management, nevertheless, is necessary to ensure that the work is performed as contracted at a reasonable cost and that the contractor follows any and all stipulations that are part of the contract.

A Procurement Example

A Section 811 PRA program decides to secure a subcontractor to assist with vouchering and other TRACS-related tasks. The grantee anticipates the cost to be $10,000 annually. The grantee contacts peer agencies that have similar subcontracts and identifies a number of agencies that can perform this service.  The grantee develops a scope of work and sends it to three of these firms for quotes.

It is worth noting that in addition to the baseline procurement requirement articulated in §200.317-326, some of the grantees will have additional procurement requirements – state guidelines for PRA grantees or their internal agency requirements for providing Service Coordinator functions – with which they will also have to comply. The strictest guidelines/requirements will need to be followed.