Procurement system standards and requirements, approval requirements, contracting with small businesses, minority-owned firms, and women's business enterprises

8.3.4 Procurement System Standards and Requirements

8.3.4.1 General

Recipients may acquire a variety of goods or services in connection with a grant-supported project, ranging from those that are routinely purchased goods or services to those that involve substantive programmatic work. States may follow the same policies and procedures they use for procurements from non-Federal funds and ensure that every purchase order or other contract includes any clauses required by 75.335. All other recipients must follow the requirements in 45 CFR parts 75.327 through 75.335 for the purchase of goods or services through contracts under grants. (Note: OMB has provided a one-year grace period for implementation of these subsections for IHEs and nonprofit organizations. Thus, these requirements are expected to take effect for these entities for their first fiscal year after December 26, 2015.) The requirements for third-party activities involving programmatic work are addressed under Consortium Agreements chapter in IIB.

A contract under a grant must be a written agreement between the recipient and the third party. The contract must, as appropriate, state the activities to be performed; the time schedule; the policies and requirements that apply to the contractor, including those required by 45 CFR 75, Appendix II - Contract Provisions for Non-Federal Entity Contracts Under Federal Awards and other terms and conditions of the grant (these may be incorporated by reference where feasible); the maximum amount of money for which the recipient may become liable to the third party under the agreement; and the cost principlesThe government-wide principles, issued by OMB (or, in the case of commercial organizations, the Federal Acquisition Regulation [48 CFR 21], or, in the case of hospitals, 45 CFR 75, Appendix IX, "Principles For Determining Costs Applicable to Research and Development Under Grants and Contracts with Hospitals"), on allowability and unallowability of costs under federally sponsored agreements. See Cost Considerations-The Cost Principles for additional details. to be used in determining allowable costs in the case of cost-type contracts. The contract must not affect the recipient's overall responsibility for the direction of the project and accountability to the Federal government. Therefore, the agreement must reserve sufficient rights and control to the recipient to enable it to fulfill its responsibilities.

When a recipient enters into a service-type contract in which the term is not concurrent with the budget period of the award, the recipient may charge the costs of the contract to the budget period in which the contract is executed even though some of the services will be performed in a succeeding period if the following conditions are met:

However, costs will be allowable only to the extent that they are for services provided during the period of NIH support. To limit liability if continued NIH funding is not forthcoming, it is recommended that recipients insert a clause in such contracts of $100,000 or less stipulating that payment beyond the end of the current budget period is contingent on continued Federal funding. The contract provisions prescribed by 45 CFR 75, Appendix II - Contract Provisions for Non-Federal Entity Contracts Under Federal Awards, paragraph B specify termination provisions for contracts in excess of $100,000.

8.3.4.2 Approval Requirements

The procurement standards in 45 CFR 75.333 allow NIH to require approval of specific procurement transactions under the following circumstances (and provide a mechanism for governmental recipients to be exempt from this type of review):

  • A recipient's procurement procedures or operations do not comply with the procurement standards required by those regulations.
  • The procurement is expected to exceed the "simplified acquisition threshold" (currently $250,000 per OMB memo M-18-18) (formerly the "small purchase threshold") established by the Federal Property and Administrative Services Act, as amended, and is to be awarded without competition or only one bid or proposal is received in response to a solicitation.
  • A procurement that will exceed the simplified acquisition threshold specifies a "brand name" product.
  • A proposed award over the simplified acquisition threshold is to be awarded to other than the apparent low bidder under a sealed-bid procurement.
  • A proposed contract modification changes the scope of a contract or increases the contract amount by more than the amount considered to be a simplified acquisition.

When NIH prior approvalWritten approval by an authorized HHS official, e.g., a designated IC GMO, evidencing prior consent before a recipient undertakes certain activities or incurs specific costs (see Administrative Requirements-Changes in Project and Budget-Prior Approval Requirements). is required, the recipient must make available sufficient information to enable review. This may include, at NIH discretion, presolicitation technical specifications or documents, such as requests for proposals or invitations for bids, or independent cost estimates. Approval may be deferred pending submission of additional information by the applicant or recipient or may be conditioned on the receipt of additional information. Any resulting NIH approval does not constitute a legal endorsement of the business arrangement by the Federal government nor does such approval establish NIH as a party to the contract or any of its provisions.

8.3.4.3 Contracting with Small Businesses, Minority-Owned Firms, and Women's Business Enterprises

Recipients must make positive efforts to use small businesses, minority-owned firms, and women's business enterprises as sources of goods and services whenever possible. Recipients should take the steps outlined in the applicable administrative requirements (45 CFR 75.330) to implement this policy.