Title 1 Basics A State Perspective Bonnie P. Granger Young Law - - PowerPoint PPT Presentation

Title 1 Basics – A State Perspective

Bonnie P. Granger Young Law Group, PLLC

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Purchasing and Procurement Issues Related to Federal Funds

To comply with Federal Purchasing and Procurement Procedures, the district must consider several factors:

• 1. Items which are covered by Mississippi

Purchasing Statutes; and

• 2. Items which are not covered or are exempt

under Mississippi Purchasing Statutes. Each district must still prove that costs are reasonable for all federal purchases and comply with Federal Purchasing requirements.

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Federal Standards for Procurement Systems

• EDGAR – Education Department General

Administrative Regulations govern how the grants are administered.

• By definition, a school district is considered a

“Local Education Agency (LEA).”

• EDGAR permits LEAs to use “existing state or

local procurement procedures if they comply with Sections 80.36(b)-(i) of EDGAR.

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What Does This Mean?

• State laws are used to comply with procurement for federal

programs primarily for contracts involving “goods” or commodities.

• Must meet the “Competition” requirement of Section

80.36(c)!

1) What about service contracts for educational services? 2) What about items exempt from Mississippi Purchasing Statutes?

• Must apply the cost principles that all federal expenditures

must be necessary, reasonable and allocable.

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Mississippi State Purchasing Definitions

• Who are the purchasing agents? § 37-39-1

defines a purchasing agent as the superintendent, or other individual or individuals designated by the school board to negotiate and make private contracts or to purchase;

• Purchasing agents are required to have

individual bonds in the penal sum of $ 50,000.

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Mississippi State Purchasing Definitions (continued)

• "Purchase" means buying, renting, leasing or
• therwise acquiring.
• "Commodities" means and includes the various

commodities, goods, merchandise, furniture, equipment, automotive equipment of every kind, and other personal property purchased by the agencies of the state and governing authorities, but not commodities purchased for resale or raw materials converted into products for resale.

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Mississippi Statute Section 31-7-13

• Section 31-7-13: All agencies and governing

authorities shall purchase their commodities and printing; contract for garbage collection or disposal; contract for solid waste collection or disposal; contract for sewage collection or disposal; contract for public construction; and contract for rentals as herein provided.

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Thresholds (Section 31-7-13)

(a) Bidding procedure for purchases not over $5,000.00. Purchases which do not involve an expenditure of more than Five Thousand Dollars ($5,000.00), exclusive of freight or shipping charges, may be made without advertising or

• therwise requesting competitive bids. However,

nothing contained in this paragraph (a) shall be construed to prohibit any agency or governing authority from establishing procedures which require competitive bids on purchases of Five Thousand Dollars ($5,000.00) or less.

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Thresholds (Section 31-7-13)

Bidding procedure for purchases over $5,000.00 but not over $50,000.00. Purchases which involve an expenditure of more than Five Thousand Dollars ($5,000.00) but not more than Fifty Thousand Dollars ($50,000.00), exclusive of freight and shipping charges may be made from the lowest and best bidder without publishing or posting advertisement for bids, provided at least two (2) competitive written bids have been

• btained.

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$5000 - $50,000 Authorizations

Any governing authority purchasing commodities pursuant to this paragraph (b) may authorize its purchasing agent, or his designee, with regard to governing authorities other than counties, or its purchase clerk, or his designee, with regard to counties, to accept the lowest and best competitive written bid. Such authorization shall be made in writing by the governing authority and shall be maintained on file in the primary office of the agency and recorded in the official minutes of the governing authority, as appropriate.

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What does “Quotes” mean?

• The term “competitive written bid” shall mean a bid

submitted on a bid form furnished by the buying agency

• r governing authority and signed by authorized

personnel representing the vendor, or a bid submitted on a vendor's letterhead or identifiable bid form and signed by authorized personnel representing the vendor.

• This control can be strengthened based on what is in the

district’s board policy. It is critical for the district to have an actual name and signature from the authorized personnel representing the vendor as occasionally invoices are presented for payment that differ from the quoted price.

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Other Details of “Quote” Threshold

• “Competitive” shall mean that the bids are

developed based upon comparable identification of the needs and are developed independently and without knowledge of other bids or prospective bids.

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Competitive defined (Continued)

• Any bid item for construction in excess of Five

Thousand Dollars ($5,000.00) shall be broken down by components to provide detail of component description and pricing. These details shall be submitted with the written bids and become part of the bid evaluation criteria.

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Competitive defined (Continued)

• Bids may be submitted by facsimile, electronic

mail or other generally accepted method of information distribution. Bids submitted by electronic transmission shall not require the signature of the vendor's representative unless required by agencies or governing authorities.

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Comparing “Quotes” for Commodities under Section 31-7-13

• In order to make sure that all vendors are given

the same opportunity, the quotes should be for identical items.

• They should be comparing “apples to apples”

instead of “apples to oranges.”

• The lowest quote should always be used for the

items needed. If one quote does not meet the specifications needed, then the district should secure another quote that does meet the specifications.

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Thresholds (Section 31-7-13) “Formal” Bid Thresholds (& ARRA)

• Purchases which involve an expenditure of more than

Fifty Thousand Dollars ($50,000.00), exclusive of freight and shipping charges, may be made from the lowest and best bidder after advertising for competitive bids once each week for two (2) consecutive weeks in a regular newspaper published in the county or municipality in which such agency or governing authority is located. However, all American Recovery and Reinvestment Act projects in excess of Twenty-five Thousand Dollars ($25,000.00) shall be bid.

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“Formal Bid” – Publication Requirements

• The purchasing entity may designate the method

by which the bids will be received, including, but not limited to, bids sealed in an envelope, bids received electronically in a secure system, bids received via a reverse auction, or bids received by any other method that promotes open competition and has been approved by the Office of Purchasing and Travel. Reverse auctions cannot be used for construction (2011 Legislative Session).

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Newspaper Advertisement

The date as published for the bid opening shall not be less than seven (7) working days after the last published notice; however, if the purchase involves a construction project in which the estimated cost is in excess of Fifty Thousand Dollars ($50,000.00), such bids shall not be

• pened in less than fifteen (15) working days after

the last notice is published and the notice for the purchase of such construction shall be published

• nce each week for two (2) consecutive weeks.

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ARRA Requirement

However, all American Recovery and Reinvestment Act projects in excess of Twenty-five Thousand Dollars ($25,000.00) shall be bid. For any projects in excess of Twenty-five Thousand Dollars ($25,000.00) under the American Recovery and Reinvestment Act, publication shall be made one (1) time and the bid opening for construction projects shall not be less than ten (10) working days after the date of the published notice.

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Mississippi Procurement Center

• On the same date that the notice is submitted to the

newspaper for publication, the agency or governing authority involved shall mail written notice to, or provide electronic notification to the main office of the Mississippi Procurement Technical Assistance Program under the Mississippi Development Authority that contains the same information as that in the published notice. Submissions received by the Mississippi Procurement Technical Assistance Program for projects funded by the American Recovery and Reinvestment Act shall be displayed on a separate and unique Internet Web page accessible to the public and maintained by the Mississippi Development Authority for the Mississippi Procurement Technical Assistance Program.

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State Contract Purchases

Exemption: Purchasing agreements approved by

• department. Purchasing agreements, contracts and maximum

price regulations executed or approved by the Department of Finance and Administration.

• If the state has already bid an item that is being purchased,

school districts may use these bids to purchase the item. However, the Department of Finance and Administration must have already obtained competitive written bids for the items for these to qualify for the exemption.

• In the past, the Department of Finance and Administration has

not bid copy machines and allows the vendors to submit new prices each year so district must be careful using these contracts.

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ITS Express Products List (EPL)

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• At one time, the EPL listed the vendor and had each piece of

equipment with prices on the Express Products List.

• Currently, the EPL only approves the company and the district

must obtain the prices from the company. Therefore, for federal purchases, the district must get prices from two vendors on the Express Products List for the same items to prove competitive bids were obtained.

• For audit purposed, the district must maintain a file with both the

EPL information and the quotes from the EPL vendors. These purchases are allowed to exceed $50,000 up to the amount listed

• n the EPL.

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Why Have We Had So Many Issues in Mississippi since ARRA Funds arrived?

• Before ARRA, at the district level, most of the

expenditures did not meet the threshold amounts that required formal bids or quotes to meet Procurement Regulations for services.

• As stated earlier, State of Mississippi Purchasing

Laws do not address services only contracts – Section 31-7-13, Miss. Code applies to contracts involving commodities only.

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Why Have We Had So Many Issues in Mississippi since ARRA Funds Arrived?

• The terms “Reasonable” and “Necessary” were

not stressed for many years during audits or monitoring – as long as the State Purchasing law was followed.

• Most districts had never attempted to obtain a

“Request for Proposal.”

• Schools are using consultants to help them with

the accountability component (focus on test scores) that is facing schools today.

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Reasonable Costs

• A cost is reasonable, if, in its nature and amount,

it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the costs. (How do you prove this?) – Inspector General’s Office said, when asked about “reasonable and necessary.” (We don’t question the judgment, we question the documentation of the judgment.) – during ARRA training with OSA.

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Edgar- Reasonable Cost Determination Factors

• 1. Whether costs is of a type generally

recognized as ordinary and necessary for the

• peration of the governmental unit or

performance of the federal award.

• 2. The restraints or requirements imposed by

such factors as sound business practices, arm’s length bargaining, Federal, State, laws, etc.

• 3. Market prices for comparable goods or

services.

• (p. 291 red book) (p. 227 blue book)

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Edgar- Reasonable Cost Determination Factors

• 4. Whether the individuals concerned acted

with prudence in the circumstances considering their responsibilities to the government unit, its employees, the public at large, and the Federal Government.

• 5. Significant deviations from the established

practices of the governmental unit which may unjustifiably increase the Federal award’s costs.

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More on Federal Procurement

• Awards should only be made to “responsible contractors”. -

Consideration should be given to integrity, compliance with public policy, record of past performance, and financial and technical resources.

• Cannot enter into contracts with entities that have been

“debarred” or “suspended” from participating in contracts supported with federal funds.

• Document by printing info from “Excluded Party List” at

https://www.sam.gov/portal/public/SAM/, (moved from www.epls.gov).

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Federal Procurements

• “Time and Materials contracts” are permissible in very

limited circumstances.

• EDGAR requires all procurements (with very limited

exceptions) be conducted with full and open competition.

• Geographical preferences that are administratively

imposed are prohibited unless federal program mandates or encourages geographical preference. Make sure not to include administratively imposed in-state or local geographical preferences because they are usually construed as inhibiting full and open competition per 80.36(c)(2).

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Written Selection Procedures

• EDGAR requires grantees and sub-grantees (school districts) to

develop written procedures for selecting vendors. EDGAR encourages applying clear, uniform and to the extent possible,

• bjective criteria for selecting vendors.
• EDGAR also requires a Written Code of Standards of Conduct,

including Conflict of Interest Standards that provides for penalties, sanctions or other disciplinary actions for violations by the school district’s officers, employees or agents, or by contractors or their agents, to the extent permitted under state or local law. (Mississippi Ethics laws provide for many of these sanctions for public officials.)

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Federal Threshold - $100,000

• Small-Purchase Procedures using a Simplified Acquisition

Threshold – applies to purchases of goods and services of $100,000 or less unless State law is more restrictive. – generally can get quotes from qualified sources up to $50,000 in Mississippi for goods or commodities.

• Procurement by Sealed Bids – A firm fixed-price contract must

be awarded in writing to the lowest responsive and responsible bidder. A firm fixed-price contract establishes a fixed, lump-sum payment for delivery of a specific good or performance of a specific service.

• Procurement by Competitive Proposals –(RFP) – Used when

conditions are not appropriate for the use of sealed bids such as when expertise is important such as professional services.

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Requests for Proposals (RFP) (Over $100,000 Threshold)

• Must be publicized and identify all evaluation factors and their

relative importance.

• Must be solicited from an adequate number of sources.
• School districts (subgrantee for Title 1 purposes) must have a

method of conducting technical evaluations of the proposals received and for selecting awardees.

• Awards must be made to responsible vendors with price and
• ther factors considered. (Price is not the only factor.)
• School districts are prohibited from awarding a contract on

factors other than the evaluation factors listed in the request for proposal.

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Requests for Proposals “Formal” – over $100,000

• Must be publicized and identify all evaluation factors and their

relative importance. Any response to publicized RFPs must be honored to the maximum extent practical.

• Awards must be made to the responsible firm whose proposal

is most advantageous to the program, with price and other factors considered. (Price is not the only factor –but must be reasonable.)

• All EDGAR requirements and must be met and all clauses must

be included.

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Request for Proposals and Contracts with Vendors

• Make sure that the contract that is signed

for these services include certain provisions for compliance with Federal statutes and Mississippi statutes and exclude other provisions not allowed under Mississippi statutes and the Mississippi Constitution.

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Contracts

• In Mississippi, only the school board is authorized to approve

contracts under Section 37-7-301. A school board can only speak through its minutes so they cannot approve contracts that are not included in the board packet.

• We suggest all contracts be forwarded to your local board

attorney (or an attorney who works with contracts) before putting them in front of the school board for approval.

• Anyone who signs a contract without school board approval

can be held personally liable for the contract if the board refuses to honor the contract. It is well-settled in case law that any employee, including the Superintendent, will be personally liable in this situation.

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Required Items to Include In Contract:

• The services to be performed or goods to be delivered;
• The dates when the services will be performed or goods

will be delivered;

• The locations where the services will be performed or

goods will be delivered; and

• The number of intended beneficiaries to be served, if

relevant.

• When payments will be made. (The contract should

state that the school district is not responsible for payments until the contractor delivers what is promised under the contract).

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Required Items to Include In Contract:

• Other contract provisions as listed in 80.36 (i)

such as administrative, contractual or legal remedies where contractor violates or breaches contractual terms, termination for cause or convenience of the school district, compliance with the Equal Employment Opportunity, Anti- Kickback Act, access to records by the school district, Federal grantor agency, and OIG and record retention requirements.

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Additional Recommended Items:

• When school district enters into a covered transaction with an entity at

a lower tier, the school district must verify that the entity and its principals, as defined in 2 CFR section 180.995 and agency adopting regulations, are not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the Excluded Parties List System (EPLS) maintained by the General Services Administration (GSA) (Note: EPLS is no longer a separate system; however, the OMB guidance and agency implementing regulations still refer to it as EPLS) and available at https://www.sam.gov/portal/public/SAM/), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300).

• Therefore, a school district can include a clause in the contract and

include it in the RFP to avoid having to look up the contractor at the website listed above.

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Beware of the Following Provisions:

• Make sure that the contract is complying with the Laws of the

State of Mississippi (and not some other State). (Vendors would much rather use their state laws to protect themselves.)

• Make sure that the contract does not have the school district

agreeing to arbitration. This is not legal for school districts in the State of Mississippi. (The vendor would like to make sure he does not have to appear in court in the county where the taxpayers are the jury or judge.)

• Make sure the contract cannot be assigned. The school

district is normally awarding these contracts based on the expertise of the consultants that are listed in the bid. Why would you allow someone else to try to fill that role?

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Beware of the Following Provisions:

Some venders have provisions such as the following: Upon termination of this Agreement, _(Vendor)_ shall be entitled to receive the compensation accrued but unpaid as of the date of termination, plus, in the event that _(Vendor)_ is not the breaching party, all amounts that would have been owed over the remainder of the Term. Notwithstanding anything to the contrary contained in this Agreement (i) _(Vendor)_ shall have no liability arising in whole or in part from an act or omission or the gross negligence of, or a specification or other information furnished by or on behalf of, the District, and (ii) the aggregate liability of _(Vendor)__ and the sole remedy of the School District for breach of contract or warranty, indemnification or otherwise, shall be limited to amounts paid to _(Vendor)_ by the School District pursuant to this Agreement, plus the actual proceeds of any _(Vendor)_ insurance policy that responds ." The Mississippi Constitution prohibits paying anyone whose services have not been rendered!

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Beware of the Following Provisions:

“_(Vendor)__ will submit monthly invoices for services rendered and the School or School District will pay the invoices within 30 days of receipt of the invoice.”

• Section 31-7-305 states: If a warrant or check, as the case may be, in

payment of an invoice is not mailed or otherwise delivered within forty-five (45) days after receipt of the invoice and receipt, inspection and approval of the goods and services, the public body shall be liable to the vendor, in addition to the amount of the invoice, for interest at a rate of one and one-half percent (1- 1/2 %) per month or portion thereof on the unpaid balance from the expiration of such forty-five-day period until such time as the warrant or check is mailed or otherwise delivered to the vendor. The provisions of this paragraph shall apply only to undisputed amounts for which payment has been authorized. In the case of an error on the part of the vendor, the forty-five-day period shall begin to run upon receipt of a corrected invoice by the public body and upon compliance with the other provisions of this section.

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Beware of the Following Provisions:

• Make sure that the “Scope of Services” that is included in the

contract refers to the contractor (vendor) meeting all requirements that they submitted in their Proposal (In response to the district’s Request for Proposal.) If not, the contractor (vendor) could be trying to reduce the requirements of the contractor (vendor) after other provisions that are left off of the “scope of services” were considered in evaluating and scoring the proposals.

• It is also a good idea to have one contact person for both the

contractor (vendor) and the school district. If so, it avoids the situation of contractor’s showing up to work when they are called by a Principal or other person who does not have the authority to call them.

• Separate purchase orders can also cut down on vendors

coming at their convenience instead of the districts convenience.

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Beware of the Following Provisions:

• Clauses that allow for the extending of services that was not in

the original proposal and request for proposals.

• The other bidders can sue if these are allowed.

The same is true for automatic renewal clauses. Multi-year contracts are allowable as long as the following items were followed:

• The original RFP allowed for extended contract (of that time

frame); and

• The clause does not bind successive school boards (normally

considered 3 years) in the State of Mississippi; and

• The funding is available.

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Other Provisions for RFP and Contracts:

• Most educational service providers submit proposals on a per-

day or per half-day price.

• Less problems will arise if the RFP and the contract spell out

what number of hours are considered to be a “Half-day” and “Full Day” price.

• For example: 3 ½ to 4 hours will be considered ½ day for

payment purposes, 7 to 8 hours will be considered a full-day.

• Some contractors (vendors) think they can show up for 2

hours and charge for a full day. It is imperative that all invoices that are paid are supported by actual documented work performed.

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Other Provisions for RFP and Contracts:

• Some of the educational service provider contractors

(vendors) want to use their “work report” as proof that they were performing their work. If this is the only proof that the auditor’s have to prove the work was performed, it can become “public record.”

• We suggest a requirement for the on-site contractor (vendor)

to complete a sign-in/ sign-out sheet that is signed by the contractor (vendor) and school or district-level administrator stating the times the contractor (vendor) worked as proof that the services were rendered.

• This sign-in/sign-out is forwarded to the Business Office to pay

the contractor’s/vendor’s invoice. A copy should also be kept by the vendor in case the Business Office copy gets misplaced.

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What about Service Contracts $100,000 or Less?

• School district can solicit quotes from an

adequate number of qualified sources for services only. These quotes are normally solicited through the same procedures as listed in the school board minutes and state purchasing statutes for quotes for goods between $5,000 and $50,000.

• Remember all quotes must still meet the

requirements such as listed in Sections 80.36(b)- (i) of EDGAR as well as the other federal procurement guidelines. (p. 121 blue/p. 115 red)

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Remaining ARRA funds

• There are still some remaining SIG ARRA funds

being expended by several school districts. If ARRA funds will be utilized to pay for the contract, the district will need to include the “ARRA” clauses in the Requests for Proposals and Contracts.

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Questions?

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Disclaimer

This presentation is intended solely to provide general information and does not constitute legal

• advice. Attendance at the presentation or later

review of these printed materials does not create an attorney-client relationship with Young Law Group, PLLC. You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances.

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