Ensuring fair and open competition in procurement is a requirement for organizations receiving federal financial assistance. These standards foster competition, eliminate favoritism, and ensure responsible spending. However, many organizations fall into common pitfalls that can jeopardize compliance.

In this post, I’ll review key principles of fair and open competition under the Uniform Guidance and offer practical tips to avoid the most frequent procurement errors.

The Importance of Fair and Open Competition

In federally funded procurements, the goal is to ensure all viable contractors have an equal opportunity to compete. This helps secure the best value for money, provides opportunity and mitigates risks like fraud, waste, and abuse.

The Uniform Guidance requires that procurements be conducted in a way that maximizes competition, ensuring fairness and transparency. However, there are common pitfalls that can result in noncompliance. Here are five that I tend to see most often.

Common Pitfalls and How to Avoid Them

1. Incorrect Use of ‘Single Source’ for Noncompetitive Procurements

One of the most common pitfalls is misusing the ‘single source’ exception, which is allowed to be applied when only one vendor is capable of providing the required goods or services. Many purchasers mistakenly believe their vendor is the only option, though other qualified vendors may be available.

How to Avoid this Pitfall: Carefully evaluate whether the “single source” justification is truly applicable. Document your rationale thoroughly, and if there is any doubt, consider conducting a competitive process to avoid scrutiny. Always remember that using the single source exception without proper justification can raise red flags, leading to increased oversight or questioning of the procurement decision.

2. Failing to Diversify Vendors for Micro-Purchases

Micro-purchases are small-dollar transactions that don’t require competition, making them quick and efficient. However, repeatedly using the same vendor limits competition and creates the appearance of favoritism. Federal guidelines encourage recipients of federal funds to distribute micro-purchases equitably among qualified suppliers to ensure fairness.

How to Avoid this Pitfall: Establish a process to rotate vendors and ensure a variety of qualified suppliers are used for micro-purchases. This not only ensures compliance but also fosters stronger relationships with a broader range of vendors.

3. Outdated and Inflexible Pre-Qualified Vendor Lists

Pre-qualified lists streamline procurement by providing a vetted pool of vendors. Federal guidelines require that these lists be kept current and contain enough qualified sources to ensure maximum open competition. If not regularly updated or if new vendors are not allowed to apply, these lists can become outdated, restricting competition and creating an unfair advantage for existing vendors.

How to Avoid this Pitfall: Set a schedule for regularly updating pre-qualified vendor lists and ensure that new vendors can submit qualifications during solicitation periods. This will help maintain a competitive pool of vendors, ensuring that the most qualified vendors—based on price, performance, and other objective factors—are always available to meet your needs.

4. Inadequate Advertising of Procurement Opportunities

Public advertising of procurement opportunities is required for contracts that exceed an organization’s simplified acquisition threshold. However, these postings can get buried deep within an organization’s website, making it difficult for potential contractors to find them. This practice not only limits competition but can also raise concerns about transparency.

How to Avoid this Pitfall: Ensure that procurement opportunities are easy to find by creating a dedicated procurement section on your website. Make this section accessible via a drop-down menu or place it in your site's footer, ensuring it’s visible and intuitive for vendors to access. Properly advertising your procurements helps promote open competition and ensures that qualified vendors have a fair opportunity to participate.

5. Failing to Evaluate All Proposals, Even Bad Ones

Some vendors submit ‘bad’ proposals that are written poorly or may miss providing required information. Even when a bad proposal is received, it’s important not to overlook or skip the evaluation process. Dismissing a proposal without review, even for good reasons, can create the appearance of bias or non-compliance.

How to Avoid This Pitfall: Ensure that every proposal—whether incomplete or poorly executed—is evaluated and documented. This not only ensures compliance with federal procurement standards but also provides a record to justify your decision if there’s ever a challenge to your procurement process.

Final Thoughts

The key to avoiding procurement compliance pitfalls lies in having complete and accurate policies that reflect all applicable regulatory requirements and expectations. These policies must clearly define the roles, responsibilities, and procedures for all staff involved in procurement activities. However, even the best policies are only effective when employees understand and adhere to them.

That’s why ongoing awareness training is equally important. Regular training sessions ensure that employees remain informed about current regulations and internal expectations, keeping compliance at the forefront of their daily tasks. By reinforcing this awareness, you can foster a culture of compliance that minimizes risk and promotes fair, transparent procurement processes.

Vendor Centric Can Help You Avoid These Pitfalls

If you need assistance in reviewing or updating your procurement policies, we’re here to help. Contact us today to learn more about our services and how we can support your compliance efforts.