Approve a revised policy on procurement incorporating recent changes in federal regulations and state law. (No general fund impact) (Pistochini/Murphy)

Approve a revised policy on procurement incorporating recent changes in federal regulations and state law.

The Office of Management and Budget (OMB) updated the Uniform Guidance (2 CFR 200), effective October 1, 2024. This update provides a comprehensive framework of federal regulations governing the administration of federally funded financial assistance awards, including grants and cooperative agreements. The primary goal of these revisions is to streamline the management of federal grants, enhance operational efficiency, and improve accountability in the use of federal funds.

Several key changes were made in the revised Uniform Guidance, including updated cost principles, adjustments to prior approval requirements, and strengthened audit standards. These changes are designed to ensure that federal funds are managed with greater transparency and effectiveness, while also reducing administrative burdens for recipients of federal financial assistance.

One significant update within the Uniform Guidance pertains to procurement thresholds for equipment and supplies. Under the revised guidelines:

The equipment threshold has increased from $5,000 to $10,000, meaning that any individual piece of equipment purchased with federal funds must now be valued at $10,000 or more to be subject to specific federal procurement requirements.  Supplies are now classified as an acquisition for less than $10,000, aligning with the revised equipment threshold and simplifying the procurement process for lower-cost purchases. 

The County traditionally does not require solicitations for items not capitalized as equipment under federal regulations.  The County has required at least two quotes for purchases of $5,000 or more and proposes changing this requirement to raise the dollar amount to $10,000 so that more than one quote is needed when a purchase is eligible to be capitalized.  The County's requirement for two or more quotes at $5,000 has remained in effect for over 10 years and has not been adjusted for inflation.

The updated Procurement Policy will incorporate these new thresholds for equipment and supplies, ensuring that procurement practices remain consistent with the most recent changes to federal requirements under 2 CFR Part 200. This will not only ensure compliance, but also promote a more efficient and transparent process for managing federally funded procurement activities.

Recently, the California legislature made changes to the California Uniform Public Construction Cost Accounting Act (CUPCCAA) that affects small construction projects.  The CUPCCA amendments increased the threshold for when a project must be informally solicited from $60,000 to $75,000, and when a project is formally solicited from $200,000 to $220,000.  The County's procurement ordinance is written to automatically adjust for these changes. However, the Procurement Policy does not explicitly set the solicitation amounts to the amounts in state law.  The revised Policy contains adjustments to conform to the County Ordinance and State Law.

County Counsel's Office, Department of Financial Services and County Administrator's Office