Revised 10/01/2024

This document is provided as a quick reference to the federal procurement standards and requirements for current and potential recipients or subrecipients of federal financial assistance provided by Wisconsin Emergency Management (WEM), a division of the Department of Military Affairs (DMA).

Procurement standards overview (The headings below are hyperlinked for navigation)  

• Standards for all procurements (competitive & non-competitive)
  • General procurement standards. 2 CFR § 200.318
  • Contract provisions. 2 CFR § 200.327
  • Federal agency or pass-through entity review. 2 CFR § 200.325
  • Competition. 2 CFR § 200.319(a)
  • Socio-economic contracting. 2 CFR § 200.321
  • Contract cost and price. 2 CFR § 200.324
• Procurement methods 2 CFR § 200.320
  • Micro-purchases. 2 CFR § 200.320(a)(1)
  • Small purchases (a.k.a. simplified bids). 2 CFR § 200.320(a)(2)
  • Formal procurement. 2 CFR § 200.320(b)
• Additional standards for competitive methods
  • Competition. 2 CFR § 200.319 (a)-(g)
  • Domestic preferences for procurements. 2 CFR § 200.322
  • Procurement of recovered materials. 2 CFR § 200.323
  • Bonding requirements. 2 CFR § 200.326
• Other resources
  • State of Wisconsin law
  • Technical assistance
  • State and tribal procurement standards vs. WEM subrecipients

STANDARDS FOR ALL PROCUREMENTS (COMPETITIVE & NON-COMPETITIVE)

General procurement standards.
2 CFR § 200.318

• Purchasing policy and procedures must be documented.
• Documented procedures must clearly cover conflict of interest policies and prevention.
• Must maintain oversight of the contractor’s performance. Unless specifically allowed in a grant, any costs associated with this requirement are not eligible under management and administration (M&A) costs awarded in the grant.
• All purchases must be necessary, reasonable, non-duplicative, and cost effective.

Contract provisions.
2 CFR § 200.327

A contract MUST include all provisions in Appendix II – Contract Provisions for Non-Federal Entity Contracts Under Federal Awards (https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/appendix-Appendix%20II%20to%20Part%20200).

Federal agency or pass-through entity review.
2 CFR § 200.325

Like all work and activity completed under a grant, all purchases and procurements MUST be properly documented as they are subject to review by both WEM and the federal agency.

Competition.
2 CFR § 200.319

All purchases MUST eliminate unfair competitive advantage, preferences, and/or a conflict of interest.

Socio-economic contracting.
2 CFR § 200.321

Socioeconomic contracting is a requirement where affirmative steps are taken to assure that minority-owned, woman-owned, veteran-owned, small businesses, and labor surplus area firms are used when possible. The affirmative steps MUST include the following:

• Placing qualified minority-owned, woman-owned, veteran-owned, and small businesses on solicitation lists.
• Assuring that minority-owned, woman-owned, veteran-owned, and small businesses are solicited whenever they are potential sources.
• Dividing total requirements, when economically feasible, into smaller tasks or quantities to permit maximum participation by minority-owned, woman-owned, veteran-owned, and small businesses.
• Establishing delivery schedules, where the requirements permit, which encourage participation by minority-owned, woman-owned, veteran-owned, and small businesses.
• Using the services and assistance, as appropriate, of such organizations as the Small Business Administration and the Minority Business Development Agency of the Department of Commerce.
• If subcontracts are allowed, the prime contractor is also required to take these affirmative steps.

Failure to carryout (or prove) these steps is frequently used as a justification to de-obligate funding by the Department of Homeland Security (DHS), Office of Inspector General (OIG). USE THE SMALL BUSINESS ADMINISTRATION’S “DYNAMIC SMALL BUSINESS SEARCH” (DSBS) TOOL TO FIND BUSINESSES TO SOLICIT https://dsbs.sba.gov/search/dsp_dsbs.cfm. Write a memo to document which three businesses were contacted, when the businesses were contacted, and whether an estimate/bid/proposal was submitted for the project.

Contract cost and price.
2 CFR § 200.324

Cost-plus-percentage-of-cost contracts are prohibited because they provide no incentive for contractors to control costs – the more contractors charge, the more profit they make. A cost-plus-percentage-of-cost contract is a cost reimbursement contract containing elements that obligate the applicant to pay the contractor an amount (in the form of either profit or cost), which cannot be determined at the time the contract is made and will be incurred in the future. In other words, there are contracted costs for work performed, plus a commission based on a percentage of these future incurred costs.  

See the example below. This contractor’s profit varies with the actual cost of performing the work. Total costs, including profit, are agreed to in negotiations prior to the work starting. The profit or “Fixed Fee” part of the invoice, highlighted in yellow, varies with the actual costs to perform the work. (Without looking at the specifics of the contract or purchase order, this cost would be deemed ineligible).

PROCUREMENT METHODS
2 CFR § 200.320

The procurement method is determined by the aggregate dollar amount for the item/service.

*Exclusions apply based on type of purchase – refer to 48CFR§2.101“Micro-purchasethreshold”.

Micro-purchases.
2 CFR § 200.320(a)(1)

• To the extent practicable, must distribute micro-purchases equitably among qualified suppliers.
• May be awarded without soliciting quotes if the subrecipient considers the price reasonable.

Small purchases (a.k.a. simplified bids).
2 CFR § 200.320(a)(2)

Relatively simple and informal competitive procurement methods for securing services, supplies, or other property that does not cost more than the simplified acquisition threshold:

• Obtain a minimum of three (3) bids via phone, catalog, internet, fax, etc.
• The Office of Inspector General (OIG) requires three direct contacts to promote socioeconomic contracting. See Socio-economic contracting section in this document.
• Avoid sole source contracts unless a non-competitive procurement applies. See 2 CFR § 200.320(c) for more information.

Formal procurement.
2 CFR § 200.320(b)

• Requests for proposals and bids must be publicized and identify all evaluation factors and their relative importance.
• Adequate time must be given to provide potential bidders with a reasonable submission time.
• Must have written method for conducting technical evaluations of the proposals received and for selection of the contractor and/or vendor.
• A subrecipient should have written procedures for procurement transactions that help decide which type of formal method is used – Sealed Bid or Proposals.

ADDITIONAL STANDARDS FOR COMPETITIVE METHODS

Competition.
2 CFR § 200.319 (a)-(g)

All purchases of goods and services must eliminate unfair competitive advantage and preference. In addition, the bidding process must not demonstrate even the appearance of a conflict of interest. Contractors and individuals that help establish specifications or develop requests are prohibited from bidding. The process must not restrict competition, which includes avoiding the following:

• Placing unreasonable requirements or terms for potential bidders to qualify to do business.
• Requiring unnecessary experience and excessive bonding.
• Noncompetitive pricing practices between firms or between affiliated companies.
• Noncompetitive contracts to consultants that are on retainer contracts.
• Organizational conflicts of interest.
• Specifying a “brand name” product instead of allowing “an equal” product to be offered.
• Any arbitrary action in the procurement process.
• Use descriptions or other relevant requirements that unduly restrict competition.

Domestic preferences for procurements.
2 CFR § 200.322

To the greatest extent practical and consistent with law, both the subrecipient and the hired contractor are required to provide preference for goods and services produced in the United States. Federal grant subrecipients must follow the Build America, Buy America Act (BABAA) preferences.

Procurement of recovered materials.
2 CFR § 200.323

When purchasing items greater than the micro-purchase threshold, the subrecipient and the contractor must comply with both the Solid Waste Disposal Act under Section 6002 and the Environmental Protection Agency (EPA) 40 CFR Part 247. Under these requirements:

• The item would contain the highest percentage of recovered materials practical.
• Preference favors solid waste management services that maximize energy and resource recovery.
• The subrecipient should include EPA guidelines and recovered materials in the procurement policies & procedures.

Bonding requirements.
2 CFR § 200.326

Only affects procurements relating to construction or facility improvement projects greater than the simplified acquisition threshold. WEM may accept the subrecipient’s bonding policy and requirements for construction or facility improvement contracts or subcontracts exceeding the simplified acquisition threshold. Reach out to the grant contact with questions.

OTHER RESOURCES

State of Wisconsin law

State law regarding procurement is under Wisconsin Statute (Wis. Stat.) Chapter 16. State law applicable to subrecipients is found under Wis. Stat. §16.73 Cooperative purchasing.

Technical assistance

The Department of Homeland Security (DHS), Federal Emergency Management Administration (FEMA) offers procurement guidance and free trainings for recipients and subrecipients on their website https://www.fema.gov/grants/procurement.

Under Wis. Stat. § 16.73(3), the State of Wisconsin’s Department of Administration (DOA) is able, upon request, to provide technical purchasing information such as standard forms, manuals, product specifications, standards, and contract templates.

State and tribal procurement standards vs. WEM subrecipients