6101 - Federal Cash & Financial Management, Allowable Costs, and Procurements

The federal Office of Management and Budget (OMB) issued rules that combine several OMB Circulars into one document titled “Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards.” The document is also referred to as the Uniform Grant Guidance. This supersedes several OMB circulars, including A-87 (Cost Principles), A-102 (Administrative Requirements), and A-133 (Audits).

Federal Cash and Financial Management

The District’s financial management system will:

• Identify all federal awards received and expended, including specific information pertaining to the award: federal program name; CFDA title and number; identification number and year; and name of federal and any pass-through agency.
• Provide for accurate, current, and complete disclosure of the results of each federal award in accordance with reporting requirements.
• Include records and supporting documentation that identify the source and application of funds for federally funded activities, including authorizations, obligations, unobligated balances, expenditures, assets, income and interest.
• Enable the District to maintain effective internal controls to ensure accountability and proper safeguarding and use of all funds, property and other assets (for example, adequate segregation of duties). The District will strengthen internal controls to ensure federal expenditures are accurately coded to the correct program, addressing audit recommendations.
• Provide a comparison of expenditures with budget amounts for each federal award.

In order for the District to comply with federal regulations for grant recipients, the superintendent will implement written procedures for 1) cash management; and 2) determining the allowability of costs in accordance with cost principles and the federal award terms and conditions.

Allowable Costs for Federal Programs

Expenditures under federal programs are governed by the Federal Cost Principles contained in 2 CFR Part 200 Subpart E – Cost Principles. The District is committed to ensuring that costs claimed under Federal awards follow these cost principles as well as any special terms and conditions contained in the award. Additionally, as a grantee, the District is required to follow the more restrictive of the federal, state, and District regulations. Staff responsible for reviewing expenditures will ensure costs are properly coded to the correct federal program and supported with documentation sufficient to demonstrate allowability under 2 CFR Part 200 and the terms of the award.

When applying these cost principles, the District will:

• Maintain responsibility for the efficient and effective administration of the Federal award through the application of sound management practices;
• Assume responsibility for administering federal funds in a manner consistent with underlying agreements, program objectives and the terms and conditions of the federal award; and
• Apply accounting practices that are consistent with the cost principles, support the accumulation of costs as required by the principles, and provide for appropriate documentation to support costs charged to the federal award.
• Ensure federal cost allowability reviews are documented in writing when required, when prior approval or special conditions are required under 2 CFR Part 200.

The District will maintain a system of internal controls over federal expenditures to provide reasonable assurance that Federal awards are expended only for allowable activities and that the costs of goods and services charged to Federal awards are allowable and in accordance with the above referenced cost principles. Internal controls will also help ensure compliance with federal procurement requirements, including documentation of cost or price analysis for purchases above the Simplified Acquisition Threshold, and verification that required federal contract provisions are included in agreements. Those controls will generally meet the following criteria:

• Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles;
• Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items;
• Be consistent with regulations and procedures that apply uniformly to both federally- financed and other activities of the District;
• Be accorded consistent treatment;
• Be determined in accordance with generally accepted accounting principles;
• Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period; and
• Be supported with  documentation sufficient to demonstrate allowability.
• Include efforts to contract with small and minority businesses, women’s business enterprises, and labor surplus firms in accordance with 2 CFR § 200.321. 
• Reflect domestic preferences for the procurement of goods, products, and materials as required by 2 CFR § 200.322.
• Ensure procurement of recovered materials in compliance with 2 CFR §200.323 and section 6002 of the Solid Waste Disposal Act.

The District’s financial management system and records will be sufficient for preparing required reports and for tracing expenditures to a level that reasonably establishes funds have been used according to federal statutes, regulations, and the terms and conditions of the federal award. This is in addition to maintaining a system of funds and accounts in accordance with state law and the accounting manual (Regulation 6020).

When required or requested by the federal awarding agency or pass-through entity, the District will submit documentation for federal review and approval in accordance with 2 CFR §200.324.

Effective November 12, 2020, the Uniform Grant Guidance allows non-federal entities who qualify as a low-risk auditee for the most recent audit, or perform an annual internal institutional risk assessment to identify, mitigate and manage financial risks that result in a low-risk assessment, to use a micro purchase threshold of $50,000. However, the more restrictive state threshold of $40,000 must be used for the purchase of goods, except for books.

The District has elected to annually self-certify by qualifying as a low-risk auditee from our most recent audit.

For federally funded public works (construction) projects, the District will follow the federal procurement methods under 2 CFR 200.320. Contracts at or above the federal Simplified Acquisition Threshold ($250,000) will be formally solicited using sealed bids, even though the state threshold for formal bidding is $350,000 under RCW 28A.335.190.

Procurement Using Federal Funds

When federal funds are used for procurement of goods (except for books): 

• Purchases of $10,000 or less (or $40,000 if deemed low risk) do not require quotes. However, the District must consider price to be reasonable, and, to the extent practical, distribute purchases equitably among suppliers.
• Purchases between $10,000 (or $40,000 if deemed low risk) and $75,000 must be procured using price or rate quotations from three or more qualified sources.
• Purchases of $75,000 or more must be publicly solicited using sealed bids.

When federal funds are used for procurement of services and books:

• Purchases of $10,000 or less (or $50,000 if deemed low risk) do not require quotes. However, the District must consider price to be reasonable, and, to the extent practical, distribute purchases equitably among suppliers.
• Purchases between $10,000 (or $50,000 if deemed low risk) and $250,000 must be procured using price or rate quotations from three or more qualified sources.
• Purchases of $250,000 or more must be publicly solicited using sealed bids.

Procurement by noncompetitive proposals may only be used when at least one of the following four circumstances applies:

• Meets sole source criteria;
• The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation;
• The awarding agency (e.g., OSPI) authorizes a noncompetitive proposal in response to a written request from the District, i.e. Safety Net, etc.; or
• After solicitation of a number of sources, competition is determined inadequate.

The District must maintain documentation supporting the applicable circumstance for noncompetitive proposals.

All federally funded contracts must also contain the applicable provisions described in 2 CFR Part 200, Appendix II, including, but not limited to, termination for cause and convenience, Equal Employment Opportunity, Davis-Bacon Act (if applicable), and Clean Air Act provisions.

Suspension and Debarment

For Federally funded vendor contracts for goods and services that equal or exceed $25,000 and any subcontract award, the District will verify that the entity is not suspended or debarred or otherwise excluded. This verification may be accomplished by checking the System for Award Management (SAM), Formerly the Excluded Parties List System, collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity.

The superintendent will establish bidding and contract awarding procedures consistent with state and federal law.

The District will maintain documentation of the suspension and debarment verification in the System PO or Vendor file for audit purposes.

Conflict of Interest

No employee, officer or agent of the District may participate in the selection, award or administration of a contract supported by federal funds if they have a real or apparent conflict of interest. Such a conflict would arise when the employee, officer or agent, any member of their immediate family, their partner, or an organization which employs or is about to employ any of the parties indicated herein has a financial or other interest in or a tangible personal benefit from a firm considered for a contract.

No employee, officer or agent of the District may solicit or accept gratuities, favors or anything of monetary value from contractors or parties to subcontracts. Violation of these standards may result in disciplinary action including, but not limited to, suspension, dismissal or removal.

The District’s conflict of interest standards for federally funded procurements will be applied in accordance with Policy 5251 – Conflict of Interest and all applicable requirements under 2 CFR Part 200.