May 17, 2019

Highlights of the Uniform Guidance’s New Procurement Standard – CFR 200.318

By Damion Cogle, Manager, Assurance Services

Related Industry Healthcare

Highlights of the Uniform Guidance’s New Procurement Standard – CFR 200.318

The new Uniform Guidance procurement standards (located at 2 CFR 200.318) will be applicable to federal single audits of organizations with fiscal years beginning on or after December 26, 2017. While not all healthcare organizations will be affected by this standard, most not-for-profit hospitals, federally qualified health centers, and other not-for-profit organizations that receive federal awards will be affected. Following are highlights of the most important requirements when considering the impact of this new standard on these organizations.

The standard requires all non-federal organizations receiving federal awards to have written documentation certifying that their procurement procedures comply with both the Uniform Guidance standards, as well as their respective state regulations, as applicable. Such written documentation should include the steps in the procurement process, the basis for the type of procurement, the contract type, and the basis for the contractor selection and price. When going through the selection process, these items should be appropriately documented by the organization, as this will demonstrate the guidelines in place at the organization and provide transparency into the process, in the event it is ever challenged.

The new standard also emphasizes the requirement for organizations to have written conflict-of-interest policies, to ensure that employees or agents of the organizations are excluded from participation in the selection, award, or administration of a contract funded by federal grant dollars, if that individual has an actual or apparent conflict of interest. Written conflict-of-interest policies are designed to help to protect the organization from bias (intended or unintended) in the selection process.

In addition, the standard states that organizations should focus on the most economical solution during the procurement process and must avoid using federal funds for the acquisition of unnecessary items. Organizations are encouraged to consider the use of shared services and intergovernmental agreements to foster greater economy and efficiency.

Once a contractor is selected, continuous monitoring and oversight by the organization of the must be maintained at an appropriate level to ensure that the contractor performs in accordance with the terms of the contract.

The above discusses just some of the key points regarding the new procurement standards. Reading the procurement sections of the Uniform Guidance, located at 2 CFR 200.318, in their entirety is strongly recommended, to ensure compliance. Failure to adopt and comply with these standards could result in audit findings that will be disclosed in accordance with single audit reporting.