Both the Federal Acquisition Regulations (FAR) used by Federal Agencies to acquire products and services to support their operations and 2 Code of Federal Regulations (CFR) 200 used by Federal Agencies for grants to support Federal programs set forth requirements that the organizations awarded contracts or grants have an established purchasing/procurement systems. Before getting a procurement under a grant, you must determine if any lower-tier organization is either a subrecipient or a contractor (read more in this article, “Understanding your Lower-Tier Relationships with Subrecipient and Contractor Determinations under 2 CFR 200.” In this article, we are only dealing with contractors under 2 CFR 200 and subcontractors under the FAR.
In general, the basic requirements of the FAR and 2 CFR 200 are similar, if not the same.
A Little Introduction
Normally, we are of the strong opinion that if the Government wants to place a requirement on a contractor, it needs to establish a contract clause (i.e., FAR part 52). Only the Department of Defense (DoD) has done this when it comes to the purchasing system – Defense FAR Supplement 252.244-7001. All other Federal Agencies simply rely on FAR part 44 and FAR 52.244-2. While neither of these references specifically state the requirements of a purchasing system like DFARS 252.244-7001(c) system criteria, they do make it clear that without an approved purchasing system, you must get consent to subcontract – Mother may I, each and every time. While we do not like it, we will refer to FAR part 44 for the requirements of an approved purchasing system. Sorry, sometimes it is hard to stay off the soapbox.
What are These Basic Requirements?
The basic requirements of an adequate purchasing/procurement under both the FAR and 2 CFR 200 are:
- Written policies and procedures – 2 CFR 200.318(a), FAR 44.303, and DFARS 252.244-7001(c)(1);
- Conflict of Interest – 2 CFR 200.318(c), FAR 203-7 and 52.203-13, and DFARS 252.244-7001(c)(17);
- Competition – 2 CFR 200.319, FAR 303(b) and FAR 52.244-5, and DFARS 252.244-7001(c)(7);
- Management of subcontracts – 2 CFR 200.318(b), FAR 303(g), and DFARS 252.244-7001(c)(14);
- Award subcontracts to responsible contractors – 2 CFR 200.318(h), FAR 303(d), and DFARS 252.244-7001(c)(20);
- Maintain adequate purchasing file documentation – 2 CFR 200.318(i), FAR 303, and DFARS 252.244-7001(c)(4);
- Perform technical analyses – 2 CFR 200.320(b)(2)(ii), FAR 303, and DFARS 252.244-7001(c)(10);
- Perform cost and price analyses – 2 CFR 200.324, FAR 303(c), and DFARS 252.244-7001(c)(8) and (10);
- Sole Source/Noncompetitive procurement – 2 CFR 200.320(c), FAR 303(b), and DFARS 252.244-7001(c)(9);
- Selection of subcontract type – 2 CFR 200.318(j) and 2 CFR 200.324(c), FAR 303(i), and DFARS 252.244-7001(c)(13);
The way we see it, if you have adequate Procurement Standards under 2 CFR 200 or an approved Purchasing System under FAR 44.303 or DFARS 252.244-7001, running a few transactions related to a grant or FAR contract through that system should reduce your risk of non-compliance. However, if the number of procurement/purchasing transactions becomes significant and you have FAR-based contracts and grants, you are going to have to expand your current system to address the specific requirements of both the FAR and 2 CFR 200. While the basic requirements of each are similar and listed above, there are some differences.
How Can Redstone GCI Help?
Redstone GCI can assist your company or organization by helping you understand the Federal Acquisition Regulation (FAR) and 2 CFR 200 requirements, drafting policies and procedures, providing training to your staff on-site or virtually, and conducting an assessment of your purchasing and procurement system.
