Balancing procurement compliance with efficiency is a practical challenge faced by every federally-funded organization.

How much is too much? Or too little?

The answer is rarely clear.

The Uniform Guidance deliberately provides flexibility in the structuring of policies and controls, as long as those controls comply with the overarching requirements.

While the lack of prescriptive guidance can be frustrating, it presents an excellent opportunity to ‘right-size’ procurement practices to be compliant while also being practical.

In this article, I’ll share four strategies for boosting your procurement efficiency by right-sizing a few very specific UG procurement standards.

About the Procurement Standards

The Uniform Guidance procurement standards were created to ensure that recipients and subrecipients carry out procurement transactions “fairly, transparently, and effectively.” Their primary aim is to safeguard federal funds by promoting sound procurement practices and ensuring purchases are made through an open and competitive process.

While the standards establish compliance guidelines and expectations, they allow organizations to tailor procurement policies and internal controls to meet their specific needs while also upholding these core principles.

Balancing Procurement Compliance with Efficiency

Complying with UG procurement standards can be challenging, particularly if you have decentralized procurement or a small staff. Finding the right balance between compliance and efficiency is essential to making procurement work for you.

I’ve analyzed the standards (extensively) and have identified four strategies that can boost your efficiency while also keeping you compliant.

Strategy #1: Choose the Right Micro-Purchase Threshold

Micro-purchases are small procurements under a set dollar threshold. They do not require competitive bidding, saving you a lot of time on procurement administration.

The default micro-purchase threshold is $10,000; however, you can increase it up to $50,000 (or even more) to reduce procurement administration even further.

The decision to go above the minimum, though, needs to be made by evaluating benefits against potential risks. If you feel there is room to increase your threshold, I recommend doing a procurement analysis to support your decision-making. Here are some things to consider in your analysis:

• Volume - how many purchases do you make between $10k - $50k? is the volume enough to warrant an increase?
• Risk - do the things you buy at smaller dollar amounts still carry risks that you wouldn’t feel comfortable accepting?
• Culture - would employees still apply ethical standards at higher thresholds?

If you go this route, be sure to read the regs as there are certain guidelines you need to meet before you can make the increase.

Strategy #2: Utilize Strategic Sourcing

Strategic sourcing is a systematic approach to buying specific categories of goods and services. It helps save money, build better relationships with suppliers, and reduce administration.

The efficiency opportunity here is to reduce the volume of competitive bidding by leveraging strategic sourcing agreements.

One of the easiest ways to leverage strategic sourcing is to participate in group purchasing cooperatives. Reputable cooperatives maintain contracts that meet UG competitive bidding requirements, allowing you to purchase directly from contracts they’ve already negotiated.

Alternatively, you can establish your own strategically sourced contracts by managing a competitive bidding process yourself. This lets you personalize contracts to your unique needs.

I continue to find strategic sourcing is underutilized by many of our clients. Now is a great time to analyze the common items you buy and identify options.

Strategy #3: Apply Risk-Based Contractor Oversight

Recipients and subrecipients must oversee contractors to ensure they comply with contract terms and conditions. However, a one-size-fits-all approach is not efficient or effective.

You can improve efficiency by taking a risk-based approach to contractor oversight and management, specifying the type and frequency of oversight activities required for different levels of contract risk.

Lower-risk contracts can be limited to basic oversight practices such as performance, cost management and routine check ins.

Higher-risk contracts, which may involve significant financial commitments, complex deliverables, or critical services, can included added activities such as periodic reporting, formal business reviews and on-site visits.

By customizing oversight practices based on the risk level of each contract, you can ensure that resources are used effectively and that all contracts receive appropriate attention to meet their specific needs.

Strategy #4: Get the ‘Shoulds’ Right

The UG is chock full of ‘musts’ and ‘shoulds’, each of which conveys a different level of obligation for your organization.

• “Must” denotes a mandatory requirement.
• “Should” suggests a recommended action or best practice.

The efficiency opportunity here is to identify the shoulds and right size expectations in your procurement policies.

Examples include:

• Should use small, minority, women and veteran-owned businesses
• Should have a preference to buy American
• Should have a preferance to buy goods and materials made of recovered materials

Aligning your procurement policies with priorities can create time savings and reduce administrative work.

Final Thoughts

Balancing procurement compliance with efficiency is an ongoing challenge, but it is entirely achievable with the right strategies.

Avoid generic policies that may not fit your specific needs. Instead, evaluate your organization’s unique objectives and tailor your procurement strategies and policies accordingly.

The time you invest now can save you 10x in the future.