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Key Takeaways on Procurement Committees
Under Federal Awards:
Ensuring Compliance and Maximizing Efficiency
By Dan Durst, Managing Director and
Sly Atayee, Senior Manager, BDO


In July 2023, Dan Durst and Sly Atayee of BDO led a webinar presentation on conducting procurement committees under federal awards. The objectives of this webinar were to review best practices for setting up procurement committees (e.g., structure, personnel, documentation), help grantees prioritize compliance while maximizing efficiency, and to provide a clear understanding of purchasing rules under 2 CFR 200 Uniform Guidance and when committees should be used

Missed the webinar? View the recording HERE. (Member login required)

Takeaway #1 – Know Your Regulations!
 
When establishing a procurement committee under federal awards, it is critical that any committee is structured and operated in accordance with the applicable federal regulations and procurement standards. As such, committee members should clearly understand the procurement standards set forth in 2 CFR 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) which establishes the rules and requirements over an entity’s administration of federal awards. The Uniform Guidance regulations specific to “Procurement Standards” are covered in sections §§200.317 through 200.327a. Special attention should be paid to the following sections with regards to how the procurement process should be set up to ensure fair and open competition while ensuring a reasonable price is paid:

  • §200.318 – General procurement standards

  • §200.319 – Competition

  • §200.320 – Methods of procurement to be followed

  • §200.324 – Contract cost and price

 
Takeaway #2 – Best Practices for Conducting Procurements Under Federal Awards
 
There are a few best practices for conducting procurements committees under federal awards that organizations can incorporate while modifying each to fit their needs based on risk and available resources:

  • Set procurement thresholds based on actual data – If your organization mostly makes smaller purchases (or purchases overseas where currency conversions result in low USD amounts), consider using a micropurchase threshold less than the allowed ceiling of $10,000. Similarly, if your organization never makes purchases over $250,000, it may not make sense to make that the threshold for when you use procurement committees. A simple review of your general ledger can give an idea of where to set thresholds.

  • Ensure at least two parties are involved in all steps of procurement processes to enhance visibility and reduce fraud risk – this is especially true of front-end processes (e.g., soliciting quotations) where all committee members are usually not involved.

  • Utilize technology when feasible to streamline and automate procurement processes – most ERP systems today have a bolt-on procurement function, or you can find low-hassle software that can automate workflows and document every step of the procurement process. When performing evaluations as part of a committee, this process can be done electronically using an established scorecard.

  • Incorporate stakeholder input to enhance procurement processes – when necessary, you can recruit outside stakeholders (e.g., your contracting officer) to be a part of your committees.

  • Seek opportunities for continuous improvement and performing periodic evaluations of committee to determine resulting effectiveness – your first committee won’t be perfect, but you can make improvements over time!

 
Takeaway #3 – Risk Mitigation is Important in Procurement Committees
 
There are a number of pros and cons to consider when deciding whether to establish a procurement committee. While procurement committees offer a lot of benefit to an organization, they also present some risks, including potential:

  • Conflicts of interest within the committee.

  • Policy noncompliance – as procurement committees are more complex, there’s a higher chance that committee members will do something outside of what is required in your policies, which can lead to audit findings.

  • Lack of transparency in committee activities and decisions due to poor documentation.

  • Lack of technical expertise if committee members are not knowledgeable or experienced in procurement processes for federal awards.

  • Introduction of inefficiencies or delays in decision-making or processes if the committee is not well-managed – otherwise known as “death by committee.”

 
Once all risks have been mitigated, procurement committees offer great benefits to organizations by helping to:

  • Systemize purchasing processes for larger, complex procurements.

  • Ensure the organization’s procurement activities meet formalized requirements for compliance – this applies to purchases over the Simplified Acquisition Threshold.

  • Provide a means for escalating decision making around purchasing – higher dollar purchases mean higher risk and more formal procedures should be required to ensure these decisions are properly vetted.

  • Preserve organizational integrity and reduce scrutiny from unsuccessful bidders by having a clearly documented process for collecting, evaluating and selecting bids.

  • Enhance transparency, accountability, and fair competition.

  • Offer leveraged expertise and diverse perspectives that can be available within a committee.

  • Verify that no conflicts of interest exist by enforcing strict acknowledge requirements for all committee members for each committee session.

 
Dan Durst is Managing Director and Sly Atayee is Senior Manager at BDO, a consulting firm that assists state and local governments, nonprofits, and institutes of higher education in several key areas, including but not limited to full lifecycle grants management, forensics and investigations, financial risk management, excellence in financial operations, and strategy.