American Pie, that iconic (and oh so crude) film from my youth has a classic line most folks from my generation still giggle over. When a friend utters “this one time, at band camp” you know a ridiculous, over the top story is about to follow. And while there isn’t a “grant camp”, I think anyone responsible for managing grant funding for more than half a second has a story that will blow your mind. Let me share a few with you.
This one time at grant camp, a police officer told me he didn’t need to get three quotes for an item because “grants are special, and we do not need to follow normal procurement.”
This one time at grant camp, a program director told me we could simply hire the same vendor again rather than going out to bid because “we have a great working relationship with them.”
This one time at grant camp, a certain company who shall remain nameless offered to write a grant for my organization all out of the goodness of their hearts. Then when we won the grant, we could use the money to purchase radios from their company. Win-win, right?
That would be a negative, ghost rider. (Now there’s another classic from my childhood, but I digress.)
Organizations from the federal government to foundations, and universities to nonprofits all have procurement and conflict of interest policies in place for a very important reason. When entrusted with someone else’s money, be it Uncle Sam’s or a local family foundation’s, we are required to spend the money wisely. Also, it’s the right thing to do, y’all. That means we complete our due diligence to ensure a reasonable price for the things we purchase with grant money. That means we give every available individual or contractor the same shot at bidding on the project. That means we don’t play favorites just because we have a long-standing work or personal relationship with someone.
The federal government has five methods for procurement, and when spending our tax dollars your organization needs its own procurement policy that is equal to, or stricter, than theirs. According to the most recently availably Office of Management and Budget update (2018), those methods include:
- Micro-purchase – $10,000 or less. This means you can pretty much go out and buy whatever you want without any special procurement process. I’m guessing your organization has a lower threshold here. A city I used to work for set this level at $1,000.
- Small purchase – $250,000 or less and at least two quotes. My former employers required three quotes and the dollar amount was much lower.
- Sealed bid – Over $250,000. Sealed bids are used when you compare apples to apples so the price is the driving factor. An example is a construction firm who will build your road based on the set of blueprints you provided. Where I used to work, the threshold was $50,000 or more.
- Competitive proposal – Also over $250,000. This is the bid process you use when price is not the driving factor, but it still plays a factor. Examples including hiring an engineering firm to design a building for you, finding a company to provide new curriculum for your school, or hiring a contractor to conduct a study for your community. In a competitive proposal, things like experience, references, educational background, and cost all come in to play so price alone cannot be the driving force. Would you want to hire the cheapest architect to build your house if he had no real-world experience? Again, your organization’s policies may be, and probably are, much stricter than this Federal policy—which if fine. This threshold was $50,000 at the city where I used to work.
- Sole source – any dollar amount. Sole source is used when there is no point to gather three quotes or go through the bidding process because there is only one person or company on the face of the earth who can do the work. Why spend the time, energy, and money going through a procurement process when there is only one option for the project or equipment. I have heard someone refer to sole source as a unicorn because it is that rare. I would say it’s more like a zebra. Most of us don’t see one daily, but when we make a special trip to the zoo, there it is. Specialized equipment, cutting-edge training, and new curriculum exist, and because of newness or relative specialty, only one contractor can offer it.
So, whether you’re managing federal, foundation, or corporate grants, be sure to pay special attention to your organization’s procurement policy. If you treat all your spending the same, there is less chance a funder is going to conduct a site visit, review a reimbursement request, or show up for an audit and ask “why did you handle this differently than the 2,000 times before now?” Following your policy and applying consistent treatment with your spending will help keep you out of trouble.
Also, make sure to include conflict of interest policies for your overall organization, and make sure staff, senior leaders and/or board members understand or follow them. Why? Because this one time at grant camp, this grant coordinator I know landed herself in jail for some serious procurement violations. She went straight to sole source to hire her husband’s company to complete all the landscaping around the city’s new senior center. Sound ridiculous? Okay, I totally made it that scenario up, but trust me: worse things have happened.
You can hear all about procurement and conflict of interest, to include some sad, but true “this one time at grant camp” stories in our season 2, episode 14 edition of the Fundraising HayDay Podcast. Take a listen here (https://t.co/qbN9O9k9Gj?amp=1) and make sure you’re not our next grant camp example.
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