Recipients may acquire a variety of commercially available goods or services in connection with a grant-supported project or program. States may follow the same policies and procedures they use for procurements from non-Federal funds. All other recipients must follow the requirements in 45 CFR 74.40 through 74.48 or 92.36, as applicable, for the purchase of goods or services through contracts under grants. The requirements for third-party activities involving transfer of substantive programmatic work are addressed under “Subawards” in this section.
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 74.48 or 92.36(i) 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 principles 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 or program 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:
• The awarding office has been made aware of this situation either at the time of application or through post-award notification.
• The project has been recommended for a project period extending beyond the current year of support.
• The recipient has a legal commitment to continue the contract for its full term. However, costs will be allowable only to the extent that they are for services provided during the period of OPDIV support. To limit liability if continued OPDIV 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 74.48 and 92.36(i)(2) specify termination provisions for contracts in excess of $100,000. In general, the rental costs for facilities and equipment applicable to each budget period should be charged to that period. Recipients are encouraged to consult the GMO before entering into leases that will result in direct charges to the grant project.
Approval Requirements
The procurement standards in 45 CFR 74.44 and 92.36(g) allow OPDIVs 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 $100,000) (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 OPDIV prior approval is required, the recipient must make available sufficient information to enable review. This may include, at OPDIV discretion, pre-solicitation 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 recipient or may be conditioned on the receipt of additional information. Any resulting OPDIV approval does not constitute a legal endorsement of the business arrangement by the Federal government nor does such approval establish the OPDIV as a party to the contract or any of its provisions.
Requirements for Using Small Businesses,
Minority-Owned Firms, and Women-Owned Businesses
Recipients must make positive efforts to use small businesses, minority-owned firms, and women-owned businesses as sources of goods and services whenever possible.
Recipients are required to take the following steps to implement this policy:
• Place qualified small, minority-owned, and women-owned business enterprises on solicitation lists
• Ensure that small, minority-owned, and women-owned business enterprises are solicited whenever they are potential sources
• Consider contracting with consortia of small, minority-owned, or women-owned business enterprises when an intended contract is too large for any one such firm to handle on its own or, if economically feasible, divide larger requirements into smaller transactions for which such organizations might compete
• Make information on contracting opportunities available and establish delivery schedules that encourage participation by small, minority-owned, and women- owned business enterprises
• Use the services and assistance of the SBA and DoC’s Minority Business Development Agency, as appropriate
• If subcontracts are to be let, require the prime contractor to take the affirmative steps listed above.
Subawards
This section includes the requirements for a grant involving subawards, including consortium agreements in which the recipient collaborates with one or more other organizations in carrying out the grant-supported activity. Subrecipients should be selected by the recipient using its established policies. HHS does not require that subawards comply with the procurement standards and requirements outlined above. The recipient is accountable to the OPDIV for the performance of the project, the appropriate expenditure of grant funds by all parties, and all other obligations of the recipient, as specified in the HHS GPS. In general, the requirements that apply to the recipient, including the intellectual property and program income requirements of the award, also apply to subrecipients. The recipient is responsible for including the applicable requirements of the HHS GPS in its subaward agreements.
The recipient must enter into a formal written agreement with each subrecipient that addresses the arrangements for meeting the programmatic, administrative, financial, and reporting requirements of the grant, including those necessary to ensure compliance with all applicable Federal regulations and policies. At a minimum, the subaward agreement must include the following:
• Identification of the PI/PD and individuals responsible for the programmatic activity at the subrecipient organization along with their roles and responsibilities.
• Procedures for directing and monitoring the programmatic effort.
• Procedures to be followed in providing funding to the subrecipient, including dollar ceiling, method and schedule of payment, type of supporting
documentation required, and procedures for review and approval of expenditures of grant funds.
• If different from those of the recipient, a determination of policies to be followed in such areas as travel reimbursement and salaries and fringe benefits (the policies of the subrecipient may be used as long as they meet HHS requirements).
• Incorporation of applicable public policy requirements and provisions indicating the intent of the subrecipient to comply, including submission of applicable assurances and certifications.
• For research subawards, inclusion of the following:
h Statement specifying whether the financial conflict of interest requirements of the collaborating organization or those of the recipient apply.
h Provision addressing ownership and disposition of data produced under the agreement.
h Provision making the sharing of data and research tools and the inventions and patent policy applicable to the subrecipient and its employees in order to ensure that the rights of the parties to the agreement are protected and that the recipient can fulfill its responsibilities to the OPDIV. This provision must include a requirement to report inventions to the recipient and specify that the recipient has the right to request and receive data from the subrecipient on demand.
• Provisions regarding property (other than intellectual property), program income, publications, reporting, record retention, and audit necessary for the recipient to fulfill its obligations to the OPDIV.