Department of Contracts, Grants and Financial Administration, Texas Education Agency 1/26/18

Transcription

1 Federal Grant Procurement Rules and Regulations and Federal Fiscal Monitoring Requirements Cory Green, Associate Commissioner Department of Contracts, Grants and Financial Administration Texas January 26, 2018 Purpose of the Training To provide information to subgrantees about federal grant procurement regulations under EDGAR and fiscal monitoring requirements for federal grants. 2 Why was EDGAR changed? Reduce fraud, waste, and abuse Simplicity and consistency Increase efficiency Strengthen oversight 3 Page 1

2 The Major Changes in Federal Grants Management 1. A Focus on Outcomes 2. Performance Metrics 3. Risk Assessments 4. Financial Management Policies 5. Equipment Use 4 The Importance of Written Policies and Procedures New EDGAR Requirements Internal Control Audits and Monitoring 5 Key Written Policies and Procedures Required by EDGAR Cash Management Procedures for Payment Allowability of Cost Conflict of Interest Procurement Travel 6 Page 2

3 EDGAR Procurement Regulations General Procurement Standards ( ) Must use your own documented procurement procedures Reflect state and local laws and requirements Conform to applicable federal statute and standards in EDGAR Written standards of conduct including conflict of interest 8 General Procurement Standards ( ) Avoid acquisition of unnecessary or duplicative items Obtain the items in the most economical way Conduct an analysis of lease vs. purchase options State and local intergovernmental are encouraged to promote cost-effective use of shared services 9 Page 3

4 General Procurement Standards ( ) Award contracts only to responsible contractors Consider the potential contractor s: Integrity Compliance with public policy Record of past performance Financial and technical resources 10 General Procurement Standards ( ) Maintain sufficient records to document procurement actions and methods Closely monitor contracts to obtain reasonable assurance that the contractor is using efficient methods and effective cost controls 11 EDGAR Procurement Grace Period OMB extended procurement grace-period for one year, effective May 17, 2017, for those LEAs already taking advantage of the procurement grace-period Implementation date for the procurement standards will start for fiscal years beginning on or after December 26, Page 4

5 EDGAR Full Implementation Other than procurement grace-period, all subgrantees must be fully implementing EDGAR policy and procedure requirements Multi-year contracts must have been rebid and compliant with EDGAR procurement requirements 13 Competition ( ) Procurement must be conducted in a manner that provides full and open competition consistent with the procurement standards Contractors cannot assist you with drafting specs, requirements, SOWs, or proposals 14 Competition ( ) Restrictive of Competition: Unreasonable requirements to qualify Requiring unnecessary experience or excessive bonding Noncompetitive pricing practices between firms Noncompetitive contracts to consultants on retainer contracts 15 Page 5

6 Competition ( ) Restrictive of Competition: Organizational conflicts of interest Specifying only a brand name product Arbitrary actions in the procurement process 16 Competition ( ) Must have written procedures for procurement transactions Procurement descriptions cannot restrict competition Must identify all requirements and factors in evaluating bids/proposals Prequalified lists of vendors is current and ensures open and free competition 17 Methods of Procurement Page 6

7 Procurement EDGAR and FASRG Follow EDGAR requirements unless the state procurement rules are more restrictive Refer to FASRG for state procurement rules 19 Follow Most Restrictive Requirement The state or LEA may have a more restrictive policy or requirement Always follow the more restrictive requirement in order to be allowable under Federal awards: Be consistent with policies and procedures that apply uniformly to both federally-funded and other activities of the non-federal entity. 2 CFR (c) 20 Methods of Procurement Micro-purchases - aggregate dollar amount does not exceed $3,500 federal rules, suggested state policy Small purchases - $3,501-49,999 federal rules require price or rate quotes from adequate number of sources 21 Page 7

8 Methods of Procurement $50,000 and above state rules in FASRG Sealed Bids or Competitive Proposals At $150,000 and above, add federal cost or price analysis in addition to state rules Noncompetitive Proposals 22 LEAs Up to $3,500 Federal procurement rules apply for micro-purchases Price must be reasonable LEA distributes micro-purchases among qualified vendors, as applicable Intent is to reduce administrative burden for the cost of small items that in aggregate cost no more than $3, LEAs Up to $3,500 Suggested state policy FASRG suggests a local policy stating that the LEA does not require competition for purchases below a certain dollar amount 24 Page 8

9 LEAs - $3,501-$49,999 Federal rules require a competitive process with price or rate quotes from adequate number of sources Minimum of two Have some type of selection matrix to document decision on vendor Choose the vendor that is most advantageous to the LEA (best fit) 25 LEAs - $3,501-$49,999 The services, equipment or supplies, or other property do not cost more than $50,000 per individual service, aggregate equipment or supplies (such as 10 similar items of equipment at $5,000 each), or other individual property 26 LEA - $50,000 and above State procurement rules apply Financial Accountability Resource Guide (FASRG) Purchasing Module Page 20 Competitive Procurement Options 27 Page 9

10 LEAs - $150,000 and above At $150,000 and above, you must add federal cost or price analysis State procurement rules in FASRG also apply 28 EDGAR Procurement Charter Schools Generally, because FASRG does not apply to charter schools unless specified in individual charter, the federal requirements apply Nonprofits Federal requirements apply 29 EDGAR Non-competitive Procurement 2 CFR (f) states that noncompetitive procurements may only be used when one or more of the following circumstances apply. 30 Page 10

11 EDGAR Non-competitive Procurement 1. The item is available only from a single source. (sole source) 2. The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation. (Hurricane Harvey) 3. TEA expressly authorizes noncompetitive proposals in response to a written request from the subgrantee. 4. After solicitation of a number of sources, competition is determined inadequate. 31 EDGAR Non-competitive Procurement The following options are not the same: 1. The item is available only from a single source. (sole source) 3. TEA expressly authorizes noncompetitive proposals in response to a written request from the subgrantee. They can be two separate types of noncompetitive procurement 32 EDGAR Non-competitive Procurement 3. TEA expressly authorizes noncompetitive proposals in response to a written request from the subgrantee. Regulation requires prior authorization, not after the fact. 33 Page 11

12 New Guidance on ESC Services ESCs are required under TEC Section to: 1) assist school districts in improving student performance, and 2) enable school districts to operate more efficiently and economically. ESCs use many methods to meet this statutory requirement, including the creation of shared services arrangements, through local contracts, and interlocal agreements. 34 Procurement of ESC Services New flexibility under the EDGAR regulations is available for LEAs in procuring services with federal funds from ESCs 1) Use of Interlocal Agreements 2) TEA Authorizing ESC Services as Noncompetitive 35 TEA Policy under EDGAR TEA now offers new options for providing LEAs more flexibility in procuring services with federal funds from ESCs under the EDGAR regulations 36 Page 12

13 Use of Interlocal Agreements 2 CFR (e) encourages LEAs to use state and local intergovernmental agreements or inter-entity agreements, where appropriate, for procurement or use of common or shared goods and services. LEAs can procure services from an ESC in different ways. 37 Use of Interlocal Agreements Option 1A If multiple LEAs are procuring the same services for the same price by joining interlocal agreements through ESCs, then the ESC could maintain EDGAR procurement compliance documentation for the group of LEAs entering into the interlocal agreement. 38 Use of Interlocal Agreements Option 1A Once each LEA verifies the ESC s compliance with the EDGAR, the LEA can purchase the services from the ESC without any further compliance documentation being needed. 39 Page 13

14 Use of Interlocal Agreements Option 1A One example of this type of interlocal agreement is a consortium for professional development where all the participating LEAs have access to the same professional development and pay the same price for the services. 40 Use of Interlocal Agreements Option 1A There have been audit findings when one LEA is paying a different price from another LEA for the same service received through the interlocal agreement. However, the price can be per teacher participating, where LEAs pay different prices due to different numbers of teachers participating. 41 Use of Interlocal Agreements Option 1B If the LEA is procuring specific services that are different for each LEA, then the LEA must follow EDGAR procurement requirements, including obtaining price quotes from an appropriate number of vendors (preferably other private vendors, not other ESCs) and using some type of selection matrix to identify the service provider who best benefits the LEA, as appropriate. 42 Page 14

15 TEA Authorizing ESC Services as Noncompetitive 2 CFR (f)(3) allows TEA, as the pass-through entity, to authorize noncompetitive proposals in response to a written request, including contracted services from ESCs to LEAs. TEA will authorize written requests for ESC services to be considered noncompetitive procurements for LEAs. 43 TEA Authorizing ESC Services as Noncompetitive Option 2A LEAs would submit the Request for Noncompetitive Procurement form (located on the TEA website) for those ESC services they wish to have authorized as noncompetitive. 44 TEA Authorizing ESC Services as Noncompetitive Option 2B Each ESC may request TEA to provide a broad, general authorization that any service from that ESC be authorized as a noncompetitive procurement for LEAs. Contact your ESC to determine if your ESC will be submitting a broad, general request. If your ESC submits this request to TEA then Options 1A and 2A are not needed. 45 Page 15

16 TEA Authorizing ESC Services as Noncompetitive Option 2B A broad, general authorization from TEA for all ESC services to be considered noncompetitive procurements is consistent with state law. EDGAR requires that the TEA preauthorization be in response to a written request from the non-federal entity. An auditor may request evidence of the LEA s written request. 46 TEA Authorizing ESC Services as Noncompetitive Option 2B TEA recommends each ESC consult with its constituent LEAs and submit the noncompetitive procurement request in writing on behalf of the LEAs. LEAs may contact their ESC or TEA for additional technical assistance and support Questions also can be sent to the ESSAsupport@tea.texas.gov inbox 47 Federal Fiscal Monitoring Page 16

17 Results of Monitoring Reviews Conducted 57 Desk and Onsite Reviews: 44 of those reviewed had at least one FINDING 32 had FINDINGS WITH QUESTIONED COSTS $563, of TOTAL QUESTIONED COSTS IDENTIFIED $456, in QUESTIONED COSTS resolved through CORRECTIVE ACTIONS $106, in FINAL QUESTIONED COSTS 49 Results of Single Audits Reviewed 651 Single Audit Reports 28 Management Decision Letters issued $157,411 in total questioned costs collected 50 Risk Assessment Annual Risk Assessment Page 17

18 Awarding Agency Review of Risk Posed By Applicants TEA must have in place a framework for evaluating risks before applicant receives funding Financial stability Quality of financial management system History of performance Audit reports Applicant s ability to effectively implement program 52 Annual Risk Assessment All pass-through entities must: evaluate each subrecipient s risk of noncompliance with federal statutes, regulations, and terms and conditions of the subaward for the purpose of determining the appropriate subrecipient monitoring Risk Factors Results of single audit Results of federal agency monitoring Funding level from all sources Financial stability Ability to manage grant funds or history of managing grant funds Recently organized or reorganized/new personnel History of performance on grant objectives Progress on corrective actions from single audits and monitoring Prior experience with the same or similar awards 54 Page 18

19 Risk Factors for Risk Indicators used to determine the risk levels Each risk indicator is weighted individually Total score determines the final risk level LEA can access its risk assessment level through the GFFC Reports and Data Collections Secure application 55 Discussion Question Why might excess carryover or lapsed funds indicate a high level of risk? 56 Discussion Question Excess carryover or lapsed funds may indicate: Poor planning Poor program implementation Poor fiscal management Poor performance outcomes 57 Page 19

20 Effect on Risk assessment Single Audit Submissions: TEA: Submission date 150 days after the end of the fiscal year with your annual financial report. FAC: Within the earlier of the 30 calendar days after the receipt of your auditors report or 9 months after the end of the audit period. 58 What Risk Levels are Assigned? Risk Levels Low Medium High 59 Risk Based Monitoring Use risk assessment to determine appropriate monitoring, including: Differentiated Grant Negotiation based on risk level: Organizations with a high risk level are subject to a more stringent grant negotiation review than those with a low risk level Which grantees to monitor What level of detail to use to monitor grantees at different levels of risk Which program requirements to monitor 60 Page 20

21 Subrecipient Monitoring Testing of expenditures Monitoring of Subgrants Depending on assessment of risk, monitoring tools may be useful to ensure proper accountability and compliance with program requirements and achievement of performance goals Training and technical assistance on program-related matters On-site or desk reviews Arranging for agreed-upon procedures engagements ( ) Monitoring of Subgrants TEA must Verify subrecipients have audits as required in Subpart F Consider taking enforcement actions ( ) 63 Page 21

22 Testing of Expenditures Initial Documentation Request Policies and Procedures An electronic copy of the chart of accounts that lists all general ledger account codes (Must be Compliant with FASRG) An electronic copy of the detailed general ledger for the period selected for review An electronic copy of the payroll journal for the period selected for review 64 Testing of Expenditures Initial Documentation Request A schedule of your organization s pay periods and the corresponding pay dates A document that reconciles any variances between the payroll costs recorded in the payroll journal and the detailed general ledger Documentation used to prepare the expenditure reports for the drawdown request(s) 65 Testing of Expenditures Initial Documentation Request A document that reconciles any variances between the total expenditures recorded in the detailed general ledger requested and the total expenditures reported to TEA Identification of specific account codes, including local option codes used for recording appropriations and/or expenditures of grant funds, reserved for specific activities Documentation used to prepare the budget submitted on the grant application Contact Information 66 Page 22

23 Testing of Expenditures Follow-up Request for Documentation to Test Payroll Expenditures: Job descriptions Applicable portion of the District Improvement and/or Campus Improvement Plan Payroll Authorization Records/Payroll Distribution Records Certification Extra duty/substitute pay records Time and effort documentation 67 Attributes Tested for Selected Payroll Transactions Was the position approved in the budget by TEA in the grant application? Was the job description signed, dated, and did it describe activities that are allowed in the grant? Was it updated to reflect current job duties? Was the position supported by laws, rules, regulations, and the grant application? Is the program/activity/strategy that is being funded described in the district/campus improvement plan? 68 Attributes Tested for Selected Payroll Transactions Was the payroll cost incurred within the allowable grant period? Did the payroll authorization form, employment contract, salary authorization, personnel action form, or other record identify all of the sources of funding from which the employee was authorized to be paid? Did the payroll records match the approved source(s) of funding? Did the teacher/paraprofessional meet the applicable certification requirements? 69 Page 23

24 Attributes Tested for Selected Payroll Transactions Time and Effort Did the employee maintain time and effort documentation (periodic certification/personnel activity report) based on single/multiple cost objectives? Did the Time Allocation agree to the Cost Allocation? Was the time and effort document signed and dated by the employee or supervisor having first-hand knowledge of work performed? Was the time and effort document signed after the work was performed? 70 Attributes Tested for Selected Payroll Transactions Substitute Time and Effort Was a Management Certification on file (at TEA) for the Substitute System Time and Effort System? Was a predetermined schedule submitted for the semiannual certification? Was the Periodic Certification (Semi-Annual) signed and dated by both employee and supervisor? Did the Time Allocation agree to the Cost Allocation? 71 Attributes Tested for Selected Payroll Transactions Extra Duty Pay Was a signed and dated timesheet for extra duty or substitute pay provided, where applicable? Was a signed and dated supplemental contract (or agreement) provided that stipulates allowable program (Title I Part A) work activities performed by the teacher for tutoring or extra duty pay? 72 Page 24

25 Testing of Expenditures Follow-up Request for Documentation to Test Non-Payroll Expenditures: Applicable portion of the District Improvement and/or Campus Improvement Plan Purchase orders/reimbursement authorizations Invoices/receipts Procurement records based on the procurement method identified for selected transactions Documentation to support purchase(s) made through Cooperative 73 Testing of Expenditures Follow-up Request for Documentation to Test Non-Payroll Expenditures: Suspension and Debarment records Executed agreement or contract, including exhibits, amendments Travel Authorization/Reimbursement records Training Documents 74 Attributes Tested for Selected Non- Payroll Transactions Allowability Was the expenditure reasonable and necessary to further the statutory purpose or did it pertain to a required or authorized activity? Was the cost of the goods or services chargeable or assignable to the grant in accordance with the relative benefits received? Is the program/activity/strategy funded described in the district/campus improvement plan? Did the expenditure meet supplement not supplant requirements? 75 Page 25

26 Attributes Tested for Selected Non- Payroll Transactions Source Documentation Was the cost incurred and the goods/services received, after the start, and before the end of the grant period? Did the accounting record include an original and complete internal accounting document (i.e., executed contract, purchase order, payment authorization form, expense reimbursement form, travel reimbursement form, etc.)? Did the accounting record include an original and complete third-party document (i.e., utility billing statement, itemized receipt/invoice, etc.)? 76 Attributes Tested for Selected Non- Payroll Transactions Source Documentation Was an approved purchase order issued prior to the invoice date? Did the accounting record indicate that the transaction was approved by an authorized individual(s)? 77 Attributes Tested for Selected Non- Payroll Transactions Procurement Was the purchase made using appropriate procurement methods? Did the purchase adhere to applicable state and/or federal competitive bidding requirements? If the purchase was made using noncompetitive procurement procedures, did the organization properly identify and maintain adequate documentation of its determination? 78 Page 26

27 Attributes Tested for Selected Non- Payroll Transactions Procurement Did the accounting record include documentation demonstrating the organization verified the vendor was not suspended or debarred? If goods/services were purchased through a cooperative, did the organization provide an agreement with the cooperative? If goods/services were purchased through a cooperative, did the organization provide documentation to support the cooperative's compliance with EDGAR's procurement requirements? 79 Discussion Question Can the following purchases within the same month qualify as a Micro-purchase? Generic Inc. $ Generic Inc. $ Generic Inc. $ a. Yes b. No 80 Expenditures of Grant Funds Purchasing based on Noncompetitive Proposal from a Sole Source vendor : Is the letter from a vendor proclaiming itself as a sole source vendor for a particular product sufficient to proceed with a purchase? a. Yes b. No 81 Page 27

28 Expenditures of Grant Funds Non competitive procurement must meet one of the following circumstances: Document that the item is available only from a single source. Document that there is a public exigency or emergency for the requirement that will not permit a delay resulting from competitive solicitation. Document that the federal awarding agency or passthrough entity expressly authorize noncompetitive proposals in response to a written request from the nonfederal entity. Keep records showing that after solicitation of a number of sources, competition is determined inadequate. 82 Discussion Question You signed a contract on August 21, 2015 for a speaker to present at a professional development event hosted by your organization on September 21, The payment for the speaker is issued on October 1, The expense for the speaker is obligated on: a. September 21, 2015 b. August 21, 2015 c. When the encumbrance is entered into your financial management system. d. October 1, Discussion Question Pursuant to EDGAR, the following list includes some of the policies and procedures that must be in writing: a. Employee benefits, inventory and financial management b. Procurement, cash management, allowable costs c. No policies and procedures must be in writing d. Procurement, inventory, and time and effort 84 Page 28

29 Discussion Question You are attending a conference in Atlanta, Georgia. The conference is in May and you purchase your airplane ticket in January. The airplane ticket obligates to the Federal grant award: a. On the date you decided to make travel arrangements b. On the date the travel arrangements are booked and seat assignments are confirmed. c. On the date the travel arrangements are paid in full. d. On the date you take the flight to Atlanta. 85 Expenditures of Grant Funds Suspension and Debarment : These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities Verification must be done by either: Checking SAM.gov; or Collecting a certification from the vendor 86 Property Standards Procedures for managing equipment must meet the following requirements: Property records Description, serial number or other ID, source of funding, title, acquisition date and cost, percent of federal participation, location, use and condition, and ultimate disposition date including sale price Physical inventory at least every two years Control system to prevent loss, damage, theft All incidents must be investigated Adequate maintenance procedures If authorized or required to sell property, proper sales procedures to ensure highest possible return. 87 Page 29

30 Subrecipient Monitoring Findings and Questioned costs Findings and Questioned Costs Examples of Findings and Questioned cost (Non-Payroll): Procurement methods not followed for purchases Lack of executed agreement of contract with the vendor Cost not necessary or reasonable for the benefit of recipients Lack of agreement with purchasing cooperative. Lack of documentation to demonstrate compliance with suspension and debarment 89 Findings and Questioned Costs Examples of Findings and Questioned cost (Non- Payroll): Lack of an Original and Complete third-party document No utility billing statement, itemized receipt, itemized invoice, etc. to support purchase Lack of Complete Internal Document authorizing purchases No purchase order or approval of purchase by authorized personnel Obligating grant funds prior to start of grant period signing contracts prior to grant period 90 Page 30

31 Findings and Questioned Costs Examples of questioned cost (Payroll): Lack of Time and Effort reporting documentation Cost not Allocated per Time and Effort records Funds obligated outside of the grant period Positions not Approved in the application Lack of Job Descriptions describing the duties/activities allowed under the program Lack of Salary Authorization to spend grant funds 91 Contact Information Department of Contracts, Grants and Financial Administration Texas (512) Copyright Notice. The materials are copyrighted and trademarked as the property of the Texas (TEA) and may not be reproduced without the express written permission of TEA, except under the following conditions: 1. Texas public school districts, charter schools, and Education Service Centers may reproduce and use copies of the Materials and Related Materials for the districts and schools educational use without obtaining permission from TEA. 2. Residents of the state of Texas may reproduce and use copies of the Materials and Related Materials for individual personal use only without obtaining written permission of TEA. 3. Any portion reproduced must be reproduced in its entirety and remain unedited, unaltered and unchanged in any way. 4. No monetary charge can be made for the reproduced materials or any document containing them; however, a reasonable charge to cover only the cost of reproduction and distribution may be charged. Private entities or persons located in Texas that are not Texas public school districts, Texas Education Service Centers, or Texas charter schools or any entity, whether public or private, educational or non-educational, located outside the state of Texas MUST obtain written approval from TEA and will be required to enter into a license agreement that may involve the payment of a licensing fee or a royalty. For information contact: Texas, 1701 N. Congress Ave., Austin, TX ; copyrights@tea.texas.gov. 93 Page 31