Procurement (01.09.09e/01-2011)

Policy

Federal and state regulations require that materials and services be obtained in a manner that is cost-effective and fair. As an ACYF Head Start Bureau grantee, the Illinois Department of Human Services (Department) is ultimately responsible to the U.S. Department of Health and Human Services for the settlement and satisfaction of all contractual obligations either directly for services purchased by the Project or through the delegate agencies for materials or services which are consistent with center implementation.

The Department's contract for services provides for sub-contracting by delegate agencies for specified direct services from private vendors or for services required under the Head Start Performance Standards. These sub-contracts are subject to Department of Health and Human Services regulations codified at 45 CFR Part 74. These regulations define the minimum administrative and procedural requirements that grantees must follow when procuring goods and services with federal grant funds and mandate that all procurement contracts contain certain clauses listed in the regulations. The Department is not responsible to any sub-contractor, vendor, employee, contractor, supplier, or creditor of the delegate agency for any contracts, purchases, or debts made by the delegate agency.

Procedures

  1. In order to avoid disallowance of expenditures, delegates shall substantiate the prevention of unnecessary purchases. The director will ascertain the need for all purchases, by checking supply storage, talking to staff, and/or checking inventory.
  2. Delegates shall show that contracts are awarded to capable contractors who have not been debarred or suspended by the federal government.
  3. When applicable, delegates shall document analysis of lease versus purchase alternatives to determine which would be most economical and practical.
  4. Delegates shall use only fixed-price contracts for goods or services:
    1. Delegates shall show proof of positive efforts to ensure use of small and minority or woman-owned business, including inviting such businesses to compete; providing information of upcoming procurement opportunities and arranging convenient times for purchases and contracts.
    2. Delegates shall conduct cost-to-price analyses by comparing price quotations, looking at market prices, taking into account any discounts offered, considering the best price for the best quality, obtaining approval of funding source(s) before purchase.
    3. Delegates shall conduct lease vs. purchase analysis for applicable products and services.
    4. Delegates shall keep records of all the above, for review by auditors, representatives of IMSHS and ACF officials.
    5. Delegates may renew annual contracts for programmatic consultants required by funders.
  5. Delegates shall maintain Standards of Conduct which:
    1. Prohibit anyone associated with the Migrant & Seasonal Head Start program from participating in the procurement process if a real or apparent conflict of interest exists:
      1. (A conflict of interest exists when anyone associated with the program, any of their immediate relatives or partners, or any organization which employs or is about to employ any of these individuals, has a financial or other interest in the firm or individual that is awarded the contract.)
      2. (Employees immediately notify the delegate director if they are concerned that a real or apparent conflict of interest exists.)
    2. Prohibit anyone associated with the program from soliciting or accepting gratuities, favors, or anything of monetary value from contractors or parties to sub-agreements;
    3. Require the dismissal of anyone who violates these Standards.
  6. Delegates shall maintain a system for contract administration to ensure that contractors conform to the terms, conditions, and specifications of their contracts.
  7. Delegates shall evaluate and document whether a contractor has met the terms, conditions, and specifications of the contract.
  8. Delegates shall bear responsibility, including financial responsibility, for any breaches in the contract process.
  9. Delegates shall include these provisions in their procurement contracts:
    1. For contracts exceeding $100,000, allowance for administrative, contractual, and/or legal remedies in the event that the contractor violates the terms;
    2. Suitable termination by the program, and the manner by which termination shall be effected, and the basis for a settlement;
    3. Compliance with Equal Employment Opportunity, Copeland "Anti-Kickback" Act, Davis-Bacon Act, Contract Work Hours and Safety Standards Act, Rights to Inventions Made Under Contract or Agreement, Clean Air Act and Federal Water Pollution Control Act, Byrd Anti-Lobbying Amendment, and Debarment and Suspension provisions;
    4. Any applicable requirements for construction and facility improvements;
    5. Statement that the Head Start program, ACF, the U.S. Comptroller General, and any of their duly authorized representatives shall have access to any of the contractor's books, documents, papers, and records which are directly pertinent to the program for the purpose of making audits, examinations, excerpts, and transcriptions.
  10. Delegates shall refrain from splitting up purchases into several small amounts in order to avoid the competitive process.
  11. Delegates shall retain procurement files which contain all of the above-mentioned evidence, including:
    1. Specifications and solicitations;
    2. Efforts to use minority business;
    3. Estimates or bids received (at least 3);
    4. Basis for selection;
    5. Justification of cost or price;
    6. Receipts for items purchased;
    7. Contracts
    8. Grantee approval
    9. Federal approval (over $25,000)
  12. A delegate's failure to comply with any IMSHS procurement procedure may result in the Department's disallowance of the cost, and a review of delegate purchases by ACF.

Small Purchase Procedures

Ordinarily, the purchasing activity is centrally administered. The fiscal coordinator is responsible for placing orders on the basis of approved requisitions originated throughout the organization. Exceptions to the centralized purchasing concept are allowed only for specific emergency situations. In such cases, an Emergency Field Purchase is followed.

Purchasing Requisition

  1. The originator of the requisition is a center coordinator or other staff member, who lists the needed items and their approximate cost. If the originator of the requisition has a preference of suppliers, it should be noted, with rationale, if necessary. This does not eliminate the responsibility for prudent purchasing action. Originator signs the form after completing it.
  2. The requisition is forwarded to the delegate director, who seeks the approval of the IMSHS grantee director, if necessary, and signs the requisition. If needed, a written approval of the grantee director is obtained and attached to the requisition.
  3. The director determines whether telephone quotations, written quotations, or sealed bids are required, and designates a person to discharge the requirements.
    1. For telephone quotes, call the required number of suppliers and obtain prices for the item (s) to be purchased. Record these prices on the purchase requisition. Review prices and select the most economical prices for the necessary quality and specifications.
    2. For written quotes, use Purchase Requisition as information source to place an advertisement in the newspaper for three days, and to call or write the required number of suppliers requesting written quotes for the item (s) to be purchased. Temporarily file the Requisition until all written quotes are received. Analyze costs, and select the responsible bidder whose quotation is most advantageous to the Head Start Program.
    3. For sealed bids, use the Purchase Requisition as an information source to call or write to the required number of suppliers, requesting sealed bids for the item (s) to be purchased. Use the specifications on the Requisition to write the bid orders.
    4. Temporarily file the Requisition until designated time to open sealed bids. Follow procedures for selection.
  4. The requisition is forwarded to the fiscal coordinator, who reviews it for allowability and affordability. The coordinator indicates approval by initialing the form, or returns it to the director if it is not approved. The fiscal coordinator completes the ordering process, returns one copy of the requisition to the originator, and files one copy. If a check is issued, the fiscal coordinator writes the check, and the director and member of the board of directors sign it.
  5. Payment to vendors is made only after receipt of all goods, or compliance with all terms of the contract.

Receiving

It is necessary to document the receipt of all goods, supplies, materials, or services, to properly account for them, and to provide the basis for making payment to the vendor.

  1. The project support coordinator receives shipment of goods.
  2. The project support coordinator (or fiscal coordinator) gets the copy of the requisition from the file. (Two other staff persons may be designated to perform this task.)
  3. The fiscal coordinator, as each item is identified and counted by the project support coordinator (or other staff), marks it received.
  4. The director, after all items received have been processed as set forth in step 3, reviews the receiving copy of the requisition to determine whether or not all items ordered were received. If all items were received, the director signs and dates the form and writes the word, "Complete," at the lower left hand corner.
  5. If not all items were received, the director writes the word, "Partial", and returns the requisition to the file.
  6. If there are erroneous charges, the director will suspend processing of an invoice and payment until the issue is resolved with the vendor.
  7. The program support coordinator delivers items to the requesting employee, who checks it against her copy of the original requisition.
  8. Within 24 hours, the fiscal officer posts items in the general ledger, and the inventory, if applicable.

Emergency Field Purchases

In certain infrequent cases, expenditures of an emergency nature must be made. Emergency expenditures are classified as those expenditures, which due to peculiar and urgent circumstances, cannot be processed under the regular purchasing procedures. The delegate director must determine whether the expenditure is an emergency. The maximum expenditure is $2,500 and is subject to prior or subsequent approval of the department.

The following sequence of activities takes place in making an emergency purchase:

  1. A staff member sees need for emergency purchase.
  2. The staff member discusses the need with the director.
  3. The director gives verbal authorization to the staff member to make the purchase.
  4. The staff member makes the purchase as authorized.
  5. The program support coordinator receives purchased goods, and signs for the purchase received.
  6. The director obtains invoice for purchase, reviews it to ensure purchase is as authorized, signs it, and forwards it to the fiscal coordinator for payment.

Sealed Bid Procedures

  1. Delegate agency generates a complete, adequate, and realistic specification or purchase description.
  2. Board designee publicly advertises and solicits bids from at least three known suppliers, of whom at least one is a minority-owned business.
  3. Board provides sufficient time for bidders to respond.
  4. Board opens bids publicly at a time and place prescribed in the invitation for bids.
  5. Board awards a fixed-price contract in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs shall be considered in determining which bid is lowest.
  6. Board may reject any or all bids if there is a sound documented reason.

Purchasing Procedures

Ordinarily, the purchasing activity is centrally administered. The fiscal coordinator is responsible for placing orders on the basis of approved requisitions originated throughout the organization. Exceptions to the centralized purchasing concept are allowed only for specific emergency situations. In such cases, an Emergency Field Purchase is followed.

Approvals Required:

  1. For single-item purchases under $5,000 - delegate agency
  2. For single-item purchases of $5,000 to $25,000 - IMSHS director
  3. For aggregate purchases under $10,000 - delegate agency
  4. For aggregate purchases of $10,000 to $25,000 - IMSHS director
  5. For any purchase of $25,000 or more - ACF official

After the grantee director and fiscal officer approve the expenditure, they will seek approval of the ACF official. Delegate staff will complete orders only after they have received copies of all signed approvals. Written approvals will be kept in files with other purchasing information at the delegate office, and duplicated at the grantee office.

Quotations Required:

  1. Single item under $5,000 - fiscal coordinator obtains three telephone quotations, using uniform specifications, and makes a written record of quoted prices.
  2. Aggregate orders under $10,000 - fiscal coordinator obtains telephone quotations, using uniform specifications, and makes a written record of quoted prices.
  3. Single item $5,000 to $100,000 - written quotations, using uniform written specifications, are obtained from three or more suppliers.
  4. Aggregate orders of $10,000 to $100,000 - written quotations, using written specifications, are obtained from three or more suppliers.

Orders of one item or one contract for $100,000 or more - Sealed bids are obtained from at least three suppliers.