OMB Rewrite of Uniform Guidance – Part 2: Procurement

In “OMB Rewrite of Uniform Guidance – Part 1: Cost Principles,” we highlighted the Office of Management and Budget’s (OMB) key proposed changes to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (commonly referred to as the “Uniform Guidance”).

In this post, we highlight key proposed changes related to procurement standards. The proposed rule contains several revisions that affect procurement standards, including:

• Encouragement of procurement opportunities with “veteran-owned businesses”
• Incorporation of Executive Order No. 14057
• Removal of the current simplified acquisition threshold limit of $250,000 for fixed-amount subawards
• Solicitation of comments on deleting a requirement for separate profit negotiations
• Changes to recipient or subrecipient procurement analysis

OMB proposes that recipients and subrecipients explore procurement opportunities with veteran-owned businesses, in addition to small businesses, minority businesses, and women’s business enterprises. The current Uniform Guidance does not make reference to veteran-owned businesses.

The proposed rule contains a new subsection that incorporates Executive Order No. 14057. Released in December 2021, the Executive Order aims to reduce emissions across federal operations; invest in American clean energy industries and manufacturing; and create clean, healthy, and resilient communities through procurement. The directive encourages recipients to procure, obtain, or utilize products and services that promote reusability, recycling, recycled content, biobased materials, energy and water efficiency, and sustainability.

In Section 200.333, OMB proposes removing the current Simplified Acquisition Threshold limit ($250,000) for fixed-amount subawards. The goal is to enhance the flexibility for agencies and recipients in programmatic and budgetary decision-making. Recipients can set their own award-specific thresholds with prior written approval from the federal agency.

OMB seeks comments on its proposal change related to a deleted paragraph in 2 CFR 200.324, mandating the recipient to engage in separate negotiations for profit, distinct from price, for each contract lacking price competition and in all cases where cost analysis is performed. To establish a fair and reasonable profit, consideration must be given to factors such as the complexity of the work to be performed, the risk borne by the contractor, the contractor’s investment, the amount of subcontracting, the quality of its record of past performance, and industry profit rates in the surrounding geographical area for similar work.

OMB also proposes new language in Section 200.324 giving recipients and subrecipients the ability to factor in workforce impacts to their procurement analysis if the procurement transaction has the potential to displace public-sector employees.

Find the OMB’s proposed revisions here:  Guidance for Grants and Agreements