Sole Source Procurements

Question: Can sole source purchases be made using ARRA funds?

Answer:  Section 1554 of the American Recovery and Reinvestment Act (ARRA) states “To the maximum extent possible, contracts funded under this Act shall be awarded as fixed-price contracts through the use of competitive procedures. A summary of any contract awarded with such funds that is not fixed-price and not awarded using competitive procedures shall be posted in a special section of the website established in section 1526.”  Although the Recovery Act calls on agencies to commence expenditures and activities as quickly as possible consistent with prudent management, this statement by itself does not constitute a sufficient justification to support award of an ARRA funded contract on a non-competitive basis. Agencies are expected to follow the same laws, principles, procedures, and practices in awarding noncompetitive contracts with ARRA funds as they do with other funds. The benefits of competition are well established. Competition saves money for the taxpayer, improves contractor performance, curbs fraud, and promotes accountability for results.

Please note that during the State Auditor’s Office training of district Superintendents on October 6, 2009, the State Auditors cautioned against sole source purchases. They indicated that the use of sole source vendors will send up a red flag for auditors.  A letter from a vendor indicating they are sole source is not sufficient evidence to substantiate the sole source designation.  Further research is necessary to reach such a conclusion and documentation must be maintained to support such conclusion.

In addition, the Department of Finance and Administration (DFA) has cautioned against sole source purchases as well. In a recent email to the MDE that has been posted on the MDE ARRA web site, DFA officials stated “Our assumption is that contracts that are sole source or non fixed price will be given a lot more scrutiny in the review by the Government Accountability Office (GAO), the appropriate Inspector General (IG), and others.”

Express Products Lists (EPLs)

Question: Can we purchase off of the Information Technology Services (ITS) Express Products List (EPL) using ARRA funds? revised 06/10/10

Answer: 06/10/10 Slide 19 of the ARRA EPL Guidelines Power Point was revised by ITS on May 12, 2010. The revision includes a link to the MERLIN web site to provide examples of how school districts are reporting their ARRA award notices and contracts as follows: https://merlin.state.ms.us/merlin/merlin.nsf/Navigation?OpenForm&Stimulus. For help in posting your contracts, you can call the MMRS Help Desk at 601-359-1343.

Revised Answer (Response from ITS received 11/16/09) Yes. ITS, DFA and OSA concur that EPLs may be used for ARRA purchases if certain guidelines are followed since the EPLs meet state requirements for competitive purchases. Customers should solicit quotes from at least two EPL vendors; multi-quotes from all or several vendors is even better. If the purchase exceeds the state EPL limits, the customer must have ITS' approval. ITS recommends that the customer and vendor sign a Supplemental Agreement with ARRA terms and conditions for all EPLs that do not have this language. ITS has published the ARRA EPL Guidelines at http://www.its.ms.gov/EPL.shtml.

(Original response received from ITS and DFA 07/24/09)  While ARRA requirements are still evolving and the current EPLs were established prior to the establishment of federal rules concerning the use of ARRA funds, to the best of our knowledge and current assessment, ITS believes the EPLs are valid purchase instruments for the use of ARRA funds. We recommend that customers using these instruments for purchases using ARRA funds obtain written quotations from multiple EPL vendors, that the request for quotations state that ARRA funds will be used for the purchase, and that all quotations be maintained in the purchase file.

ITS EPLs are established based on sealed proposals submitted by vendors in response to RFPs advertised in accordance with all state statutory requirements for legal procurements of IT products. The EPL RFPs were advertised both in a newspaper with statewide circulation and on the Mississippi Development Authority (MDA) Mississippi Procurement Technical Assistance Program website.  Advertisements exceeded the minimum timeframes required for ARRA purchases.  Proposals received in response to these RFPs were evaluated, awarded, and published for the use of any public entity in the state in accordance with the rules for use published by ITS.

Excluded Parties List System (EPLS) (Section Added 06/10/10)

Question: Do we have to check the Excluded Party List System (EPLS) before we contract with a vendor to ensure the vendor is not listed? If so, do we have to maintain supporting evidence that we verified this information before entering into a contract?

Answer: Yes. You should go to https://www.epls.gov/ to check the vendor name before a contract is executed and copy the page that the vendor would have been listed on, if the vendor were listed as an excluded party to support that you verified the vendor was not listed.

OMB Circular A-110 states "No contract shall be made to parties listed on the General Services Administration's List of Parties Excluded from Federal Procurement or Non-procurement Programs in accordance with E.O.s 12549 and 12689, "Debarment and Suspension." This list contains the names of parties debarred, suspended, or otherwise excluded by agencies, and contractors declared ineligible under statutory or regulatory authority other than E.O. 12549. Contractors with awards that exceed the small purchase threshold shall provide the required certification regarding its exclusion status and that of its principal employees." Small awards means a grant or cooperative agreement not exceeding the small purchase threshold fixed at 41 U.S.C. 403(11) (currently $25,000).

The A-133 Compliance Supplement from 2009 states "Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred. "Covered transactions" include those procurement contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other specified criteria. 2 CFR section 180.220 of the government-wide nonprocurement debarment and suspension guidance contains those additional limited circumstances. All non-procurement transactions (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions."

If you renew any contracts, you should check the site https://www.epls.gov/ to be sure the contractor has not been added since your initial contract was entered into.

In addition, your contract with the vendor should include a section that references the suspension/debarment regulations as included in Section 21 of the MDE ARRA contract template located at http://www.mde.k12.ms.us/stimulus/Procurement/ARRA_Contract_Template_MDE.doc.

Question: Do grantees have to check the Excluded Party List System (EPLS) for vendors from which they procure goods and/or services even if a contract is not awarded? 06/22/10

Answer: Yes. Grantees should be check the EPLS for all "covered transactions." A "covered transaction" includes procurement contracts for goods or services awarded under a non-procurement transaction (e.g., grant or cooperative agreement), that are expected to equal or exceed $25,000 or meet certain other specified criteria. CFR section 180.220 of the government-wide non-procurement debarment and suspension guidance contains those additional limited circumstances (the other specified criteria). All non-procurement transactions (i.e., subawards to subrecipients), irrespective of award amount, are also considered covered transactions. The definition of "procurement" in this instance is a purchase of goods or services. Therefore, an entity is not required to verify that all of its vendors are not listed on the EPLS, only vendors for which they have a procurement contract with or vendors from which they expect to spend an amount greater than or equal to $25,000.

For example, if an entity expects to pay $50,000 on supplies from Office Depot for a federal grant program, even though they do not have a signed contract with Office Depot and may only spend $5,000 for any particular invoice, the entity would still need to verify Office Depot was not on the EPLS, since the entity expects to spend more than $25,000 with Office Depot. Additionally, the Office Depot example would not be considered a non-procurement transaction, but rather, a procurement transaction (a purchase for goods or services), that simply does not require a formal contract.

ARRA Contractual Terms and Conditions

Question:  Can you define a contract under ARRA?

Answer:  DFA Memo #16 provides the definition of a contract for implementation of ARRA, the Mississippi Accountability and Transparency Act (MATA), and SB 2923 as any written agreement which contains the terms and conditions of the agreement:  “who, what, where, when, and how” and all amendments, changes, modifications, and additions to the terms and conditions for the life of the agreement.  To be valid, a contract must be signed by an appropriate representative of all parties to the agreement.

Question: Are there specific contractual terms and agreements that must be included in all ARRA contracts? revised 11/10/09

Answer: Yes. The MDE has developed an ARRA contract template to be used for ARRA contracts entered into by the Department.  In addition, the Office of the State Auditor has provided a summary of Potentially Required State and Federal Contract Certifications and Representations for school districts.  This document is for school district officials to use as a resource as they work with their attorney to develop ARRA contracts.  District officials are encouraged to review the federal ARRA laws for each ARRA program administered to ensure that all ARRA terms and conditions are included in the school district ARRA contracts.  Both documents are posted on the MDE ARRA web page at the following link: http://www.mde.k12.ms.us/stimulus/Procurement.html

DFA has also issued several memos related to ARRA contracts including Memo #12, #26, and #27.  Memo #12 includes standard award terms required by ARRA in all financial assistance awards. The DFA memos are posted at the following link: http://www.mmrs.state.ms.us/statewide_applications/Stimulus/Stimulus_Policies_and_Procedures.shtml. DFA is continually adding information to their web page so it is updated quite frequently with various procedures to follow pertaining to ARRA such as reporting, contracts and agreements, accounting procedures, job postings, etc.

Question: Is there a model letter that is available to send out to vendors to notify them that we are purchasing with ARRA funds? Do the vendors have to sign showing that they are in agreement before we are to purchase?

Answer: (Response received from Office of the State Auditor)  There are no form letters that make vendors aware of the use of ARRA funds.  With that said, most entities are putting it in their proposal, RFP, statement of interest, etc.  If none of those avenues are available, then a simple statement that says something like, "By entering into a contract with X, you hereby understand and agree that all items (services) are being paid for with monies from the American Recovery and Reinvestment Act.  By accepting these funds (agreeing to contract with us, etc.) you agree to abide by all the terms and conditions of ARRA.  This may include, but not limited too...."

The vendor needs to be well aware that they are receiving ARRA funds.  This must be disclosed on the front end.  Even if they were only receiving $1 in ARRA funds, all of the language and conditions apply.  And, they will have obligations to follow.

Question: Do I need a second quote when I purchase off of the MDE state agency contract for Combination Oven/Steamers? added 10/29/09

Answer: No.  These contracts were awarded to the lowest, most responsive bidders through a competitive bid process, after a formal bid solicitation conducted in the fall of 2007. The contract was then extended for a second year, at no increase in pricing, effective November 6, 2008 through November 5, 2009. The contract was amended earlier this fall to bring it in compliance with ARRA regulations. Because this contract was awarded subsequent to a competitive bid solicitation, should schools elect to purchase from them, there is no need for additional quotes to be secured.

Web Posting of Contract Notice of Awards and Contracts

Question:  What are the requirements for posting notice of bids and contract notice on the public web site? revised 11/17/09

Answer:  DFA Memo #9 states for ARRA projects, the same date that notice information is provided to the newspaper for publication, the agency or governing authority must also submit this notice electronically to the Mississippi Procurement Technical Assistance Program within the Mississippi Development Authority. The Mississippi Procurement Technical Assistance Program is required to publish these notices on a unique website within 24 hours of receipt.  Notices should be emailed to bids@mississippi.org or faxed to (601) 359-5290.  Subject line should include “ARRA Stimulus Recovery Project.”  Note that the bids cannot be opened until posted on this site for a minimum of ten working days.

Additional changes to this section require DFA to post award and contract information as well as other information related to ARRA on a dedicated website. DFA shall promulgate rules regarding format, content and deadlines, unless otherwise specified by law, of the posting of award notices, contract execution and subsequent amendments, links to the contract documents, expenditures against the awarded contracts and general expenditures of funds from ARRA. The law requires that within one (1) working day of the contract award, the agency or governing authority shall post to the designated web page notice of the award, including the award recipient, the contract amount, and a brief summary of the contract. Then within one (1) working day of the contract execution, the agency or governing authority shall post to the designated web page a summary of the executed contract and make a copy of the appropriately redacted contract documents available for linking to the designated web page in accordance with the rules promulgated by the department. This information shall remain posted to the web page for the duration of the ARRA funding or until the project is completed, whichever is longer.

Construction projects utilizing as its authority the tax credit bonds, i.e., Qualified School Construction Bonds (QSCB) and Qualified Zone Academy Bonds (QZAB) -  are not required per DFA at this time to submit the construction contract information related to QSCB and QZAB projects to a designated DFA web page as mentioned in the above paragraph for all other awards and contracts. 

However, posting of bid notices for these QSCB/QZAB projects to the MS Procurement Technical Assistance Program's email address as above is still required.

DFA Memo #26 provides the requirements for web posting of contract notice of awards and contracts. The MATA, SB 2923, and ARRA require that contract notice of award documents, executed contracts, and any amendments be posted on a searchable website.

The American Recovery and Reinvestment Act of 2009 (Stimulus) and Senate Bill 2923 (2009 Regular Legislative Session) require that contract notice of award documents, executed contracts, and any amendments for contracts utilizing Stimulus funds be posted on a searchable website. The Department of Finance and Administration (DFA) has developed an online web database specifically for state agencies, public, and private entities who are not users of the Statewide Automated Accounting System (SAAS) to enter such contract awards and executed contracts. The Non-SAAS Statewide Award/Contract Interface is located on the web at: https://merlin.state.ms.us/Stimulus/ContractUploads.nsf/Home?OpenPage.

Senate Bill 2923 (Mississippi Purchasing Law)

Question:  Does SB 2923, enacted during the 2009 Regular Legislative Session, cover the purchase of personal service contracts?

Answer:  No.  DFA Memo #9 describes the purchasing law changes made by SB 2923 which became effective April 15, 2009.  SB 2923 covers the purchase of commodities and printing, contracts for garbage collection or disposal, contracts for solid waste collection or disposal, contracts for sewage collection or disposal, contracts for public construction, and contracts for rentals.

Question:  What is considered a commodity under SB 2923?

Answer:  Commodities include but are not limited to the following: goods, merchandise, furniture, desks and all other items of personal property generally referred to as home, office, or school furniture (such as chairs, tables, seats, filing cabinets, bookcases, appliances, carpets, and all other items of a similar nature as well as dormitory furniture), equipment (such as automobiles, trucks, tractors, office appliances, and all other equipment of every kind and description), other personal property, and software.

Question: SB 2923 states that all ARRA projects in excess of $25,000 must be bid.  Can you define “ARRA projects?”

Answer: ARRA projects as referenced in SB 2923 includes projects using ARRA funds for the purchase of commodities and printing, contracts for garbage collection or disposal, contracts for solid waste collection or disposal, contracts for sewage collection or disposal, contracts for public construction, and contracts for rentals.

Question: Does a school district have to competitively bid personal service contracts?

Answer:  Personal services contracts (i.e., consulting, professional development training, and architects) are not required by state law to be bid.  However, because of the unprecedented level of accountability and reporting, districts are encouraged to procure personal services through a competitive process.

Section 1554 of the American Recovery and Reinvestment Act requires that to the maximum extent possible, ARRA funded contracts are to be awarded as fixed price contracts through the use of competitive procedures.  Although the Recovery Act calls on agencies to commence expenditures and activities as quickly as possible consistent with prudent management, this statement by itself does not constitute a sufficient justification to support award of an ARRA funded contract on a non-competitive basis. Agencies are expected to follow the same laws, principles, procedures, and practices in awarding noncompetitive contracts with ARRA funds as they do with other funds. The benefits of competition are well established. Competition saves money for the taxpayer, improves contractor performance, curbs fraud, and promotes accountability for results.

For all purchases using federal funds, districts should ensure that the purchases comply with all the requirements set forth in Circular A-87, which has been codified as
2 CFR part 225.

Question: Can you define construction?

Answer: Construction includes the process of building, altering, improving, renovating or demolishing a public structure, public building, or other public real property.  Construction does not include routine operation, routine repair or regularly scheduled maintenance of existing public structures, public buildings or other public property.

School Bus Purchases

Question:  Can my district purchase school buses using the approved MDE list of bus vendors?

Answer:  Yes.  In accordance with DFA Memo #27, statewide agreements may be used as purchasing instruments utilizing Stimulus funds.  These agreements include the agency sponsored statewide agreements such as the School Bus Prices and Approved Vendors List managed by the Department of Education for use by the school districts. The MDE will ensure that the ARRA terms and conditions are included in the vendor contracts.

Qualified School Construction Bonds (QSCB)

Question: Can school districts extend the amount of time a bid request is open for construction or repair projects funded with QSCBs?

Answer: The advertising notice and length of time to wait before bid opening are minimums, so the date can be longer and there can be more advertising, so long as the statutory minimums are met.

Question: Are construction, repair projects funded with QSCBs subject to the Buy American, National Environmental Policy Act, reporting, and whistle-blower requirements? revised 11/17/09

Answer: No. (Response received from Office of the General Counsel, USDE) QSCBs are not subject to the provisions in Division A because they are authorized in Division B of the Recovery Act. Davis-Bacon prevailing wage requirements are in both divisions. I have heard that the Treasury folks may be consulting with the Department of Labor on that issue. If you need more technical advice on other terms and conditions, as well as the Davis-Bacon terms, I suggest you contact Branch 5 of the Internal Revenue Service, Office of Associate Chief Counsel (Financial Institutions and Products) (202-622-3980).

(Response received from IRS, phone number 202-622-3980) The Davis-Bacon Act requirements are those found on their website at http://www.irs.gov/, under Tax Exempt Bond Community, Information for the Tax Exempt Bond Community, IRS Releases Guidance of ARRA Bond Provisions, Davis-Bacon Labor Standards Provisions.

Question: Is the school district a "Prime" recipient with QSCBs funding?

Answer: The Federal reporting requirement (section 1512) does not apply to QSCB projects.

Prime Recipient vs Sub-recipient

Question:  Define a prime recipient and a sub-recipient, in relation to the Section 1512 reporting requirements.

Answer:  A prime recipient is a non-federal entity that receives Recovery Act funding in the form of a contract, grant, or loan, directly from the federal government.  Prime recipients must complete a Section 1512 report on a quarterly basis and submit it to http://www.federalreporting.gov/.

A sub-recipient is a non-federal entity awarded Recovery funding from a prime recipient to support a project or program for which the prime recipient received Recovery funding.  A sub-recipient of the MDE must submit data to the MDE in order for the MDE to complete a Section 1512 report on a quarterly basis to submit to http://www.federalreporting.gov/.

2009 National School Lunch Equipment ARRA Funding

Question:  What can the NSLP Equipment funds be used to purchase?

Answer:  Funds are provided to purchase equipment that lends itself to improving the quality of school food service meals that meet the dietary guidelines.  Grant applications were accepted for the purchase of Combination Oven Steamers to replace fryers in schools.

Question:  How will grant applications be evaluated?

Answer:  Grants will be scored by a panel of judges.  Schools with the highest scores will be selected as long as funding is available.  Schools will receive grant funding for the purchase of ovens and accessories at a cost not to exceed $38,000.00.

Question:  When will we receive our funding?

Answer:  Grant funds are paid out on a reimbursement basis.  Schools will purchase the ovens and accessories and submit a copy of the invoice to the State Agency.  The State Agency will reimburse the school district for the cost of the equipment up to the grant award amount.

Question:  What time frame must we submit invoices to receive reimbursement?

Answer:  USDA is asking that funds be utilized as soon as possible to impact the economy as intended.  The State Agency must obligate funds to schools by September 30, 2009.  Schools have up to two years to purchase the equipment and submit a copy to the State Agency for reimbursement.  Schools should purchase their equipment as soon after receiving their grant award as possible.

Question:  How should I procure this equipment?

Answer:  The Department of Finance and Administration has several state agency contracts for Combination Oven Steamers from which school districts may purchase.  If school districts use the state contracts no further procurement activities are needed.  State contracts will expire on November 5, 2009 so purchase orders need to be submitted to these vendors before this date.  School districts may procure their own ovens.  ARRA funding requires equipment purchases over $25,000 to be formally bid.   Federal regulations require equipment purchases not formally bid to obtain at least two price quotes.