WA State Auditor Issues Updated Guidance on Federally Funded Projects

The Washington State Auditor's Office has issued important updated guidance to local agencies about how they will interpret federal and local requirements working together, and what the Auditor's Office expects in terms of compliance.

Here's what the Auditor's Office wrote in their Fall 2014, Audit Connection newsletter: 

"Federal procurement requirements update:  In the past, our Office's guidance regarding procurements using federal funds indicated that local governments could rely solely on state bid law.  However, that guidance is being updated.  Procurements using federal funds must meet all of the applicable federal, state and local government-specific requirements.  Therefore, when there is state law that sets a threshold for small purchase procedures that is less restrictive than federal requirements, the local government's purchasing practices must also conform to the applicable federal regulations.

Federal regulations require that all purchases using federal funds meet certain bidding and procurement requirements.  The Circular A-102 Common Rule, currently adopted by federal agencies in their own regulations, allows non-federal entities to "use their own procurement procedures which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this section."

For example, a local government may have state law thresholds that require quotes for purchases over $40,000 and bids for purchases over $75,000.  However, current federal regulations for small purchases (under $100,000) require it to obtain quotes from an "adequate number of qualified vendors" - which means at least two.  Therefore, we would expect to see quotes for all purchases below the state bid threshold of $75,000 or less.  Since the federal "micro-purchase" rules exempt procurements of less than $3,000 from these requirements, we would apply this guidance to purchases of $3,000 and above. (Note that the federal limit for small purchases will rise to $150,000 in December 2014.)

Additionally, the local government's policies and procedures for small purchases with federal funds should be consistent with its procedures for purchasing with state or local funds.  In other words, if the policy is to obtain three quotes (written or verbal), we would expect the same for the federal purchases."

Mike Purdy's Public Contracting Blog
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