Competition Requirements for Grants Guidance and FAQs

Background

• The Federal Office of Management & Budget (OMB) promulgated the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, commonly referred to as the “Uniform Guidance” (2 CFR Part 200). The Uniform Guidance requires the State to comply with its procurement code when awarding Grants that use federal funds. The State has exempted Grants from the Procurement Code. To clarify the Competitive Process for the awarding of Grants that are exempt from the Procurement Code, the Office of the State Controller issued a Policy entitled “Competition Requirements for Grants” (“Policy”). The purpose of this Technical Guidance is to assist State departments, employees, and individuals in complying with the Policy.
• The requirements for competition in the Policy apply to all Competitive Grants awarded by the State. The Policy requirements for competition do not apply to the award of Contracts, which are procured in accordance with the Procurement Code. The Policy also does not apply to Institutions of Higher Education that are exempt from the Procurement Code or to Legislative and Judicial Branches.

General Guidance Definitions

• All terms used in this technical guidance that are defined in the Policy shall have the meanings ascribed to them in the Policy. For the purposes of this Technical Guidance, the following terms shall have the meanings ascribed to them below.
  • Applicant. An entity that submits an Application for a Grant from a State Agency.
  • Award Classifications. Are defined in Appendix 1 to this Technical Guidance.
  • Exchange Transaction. A reciprocal transfer between a Contractor and a State Agency in which a Contractor delivers goods or provides services to a State Agency, the State Agency uses the goods or directly benefits from the services, and the State Agency pays fair value for the goods or services.
  • Fiscal Agent. An entity that takes responsibility for financial or other types of transactions for another entity. For purposes of an Application and resulting Grant Agreement, a Fiscal Agent is a separate entity that agrees to assure that a project will use awarded grant funds to accomplish the ends described in the Application and the resulting Grant Agreement.
  • Grant Agreement. A legal instrument of financial assistance between an awarding agency or PTE and a recipient, memorializing the terms of a Federal award or State Grant.
  • Grantor. The State entity that passes funds to a Grantee.
  • Non-exchange Transaction. A transaction in which an awarding agency transfers anything of value to carry out a public purpose authorized of law, instead of acquiring property or services for its direct benefit.
  • OMB Procurement Methods. Following three methods of procurement described in the OMB Uniform Guidance: informal procurement (for micro-purchase and simplified acquisitions), formal procurement (through sealed bids or competitive proposals), and non-competitive proposals. (See 2 CFR §200.320)
  • Purchased Services. The acquisition of services which directly benefit specific groups or individuals in the public at large as defined by law, from public or private entities licensed, certified, or otherwise authorized by statute to provide such services. (See CRS §24-50-502(3)) A State agency entering into a Contract for Purchased Services pays fair value to the provider of the services.

Award Classifications - General.

• All transactions where a State Agency will provide funds or transfer anything of value to another entity are classified as a Grant or Contract. See the table in Appendix 1 to this Technical Guidance for the description of and requirements for each Award Classification.
• An Award of federal or State funds shall be classified as a Grant or Contract based upon the nature of the transaction, and not the funding source. Funding sources under which a State Agency may receive funds may include any of the following:

Award Classifications - Habitat Enhancement Projects on State Lands

This section applies only to habitat enhancement projects on State land. Habitat enhancement projects on non-State lands are subject to the “Award Classifications – General” section above. An Award of State funds for a habitat enhancement project located on State land will be classified as a Grant or Contract based upon the characteristics of the transaction and the funding sources.

• A Grant Agreement for a habitat enhancement project located on State land must include terms that limit the State’s risk. The Grant Agreement must include:
  • A requirement for the Grantee/Subrecipient to provide performance and payment bonds for work performed and materials supplied on State land or, in lieu thereof;
  • At the sole discretion of the State Agency, provisions requiring the Grantee/Subrecipient to indemnify and hold harmless the State Agency from any claims or losses incurred by the State Agency as a result of:
    • The failure of the Grantee/Subrecipient to complete the habitat enhancement project in accordance with its specifications; and
    • The failure of the Grantee/Subrecipient to pay subcontractors and suppliers for labor or materials provided in connection with the habitat enhancement project on State land.
    • The failure of the Grantee/Subrecipient or its subcontractors to perform any of the obligations identified above will constitute a breach of the Grant Agreement. The Grantee/Subrecipient shall remain liable to the State Agency for any damages sustained by the State Agency in connection with any breach by the Grantee/Subrecipient.
  • At the sole discretion of the State Agency, a Contract for a habitat enhancement project located on State land, funded solely by cash provided or services performed by the donor of such funds or services, may contain the indemnification and hold harmless terms and conditions required in section 2 above, in lieu of a requirement for performance and payment bonds.

Competitive Process

• Request for Application Example. A Request for Application or “RFA” is a common competitive process used to award grants. An example of an RFA template is available on the OSC website, but State Agencies may develop their own RFA template in their discretion.

Reconsiderations

• Grants. If an entity disagrees with the determination of whether that entity should have received a Competitive Grant or with a determination of its compliance with the requirements of a Grant, the entity will have the following reconsiderations in relation to that Grant:
  • Sponsoring Agency Reconsiderations. If a Sponsoring Agency provides for an appeal process, then the State Agency administering the Grant shall follow the appeal process provided by the federal program.
  • Federal Program Reconsiderations. If a federal program under which funding is provided for the Grant provides for an appeal process, then the State Agency administering the Grant shall follow the appeal process provided for by the federal program.
  • State Reconsiderations. If there is no Sponsoring Agency or federal appeal process available, then Applicants who believe that they should have been awarded a Competitive Grant when they were not or who believe that they were otherwise not properly awarded a Competitive Grant may submit their appeal to the State Agency’s Procurement Official or Program Administrator, who shall review the appeal and make a final determination, unless the authority for making this determination is otherwise specified by law. The sole remedy for Applicants shall be potential funding depending on availability of funding.
• Contracts. Any protest, appeal, or dispute related to a Contract shall be resolved in accordance with the Procurement Code.

Grant Agreement Disputes

• If Grantee or Subrecipient has a dispute related to a Grant Agreement to which they are a party, then the dispute shall be resolved in accordance with the terms of the Grant Agreement. If the Grant Agreement does not include a dispute resolution process, the program staff at a State Agency shall attempt to resolve the dispute with the Applicant. If the program staff and the Applicant are unable to resolve the dispute, the Applicant shall appeal to the State Agency’s Procurement Official or Program Administrator if so delegated, who shall make a final determination to resolve the dispute.

Disclaimer

This is internal guidance to assist State grant and procurement professionals in interpretation and application of the laws, rules, and policies that govern grant and procurement practices.  Every attempt is made to keep technical guidance information updated. For additional information, contact your department Procurement Official.

Appendix

• Appendix 1 to Competition Requirements for Grants and Contracts Technical Guidance
  • Classifications of Awards. There may be four or more levels of awards as funds are passed down from the initial funding source to the entity that provides the services or delivers the goods.

Classification and Requirements for Awards using Federal Funds

Classification and Requirements for Awards Using State and Private Funds Only

Frequently Asked Questions

Question: If the OMB guidance says that State agencies who receive a grant from a federal agency are supposed to follow their procurement rules, why am I being told to follow the Competition Requirements for Grants Policy instead of the Procurement Code?
Answer: Due to changes in the Procurement Modernization Initiative (HB 17-1051), Grants were exempted from the Procurement Code effective August 9, 2017. The OSC developed the Competition Requirements for Grants Policy and Technical Guidance to provide direction to State Agencies in regards to Grants.

Question: Is the Competition Requirements for Grants Policy mandatory or do State Agencies have the option to create their own grant policy?
Answer: The Competition Requirements for Grants Policy is mandatory for all competitive grants therefore State Agencies are required to follow the OSC Grant Policy (effective August 9, 2017; updated July 14, 2022).

Question: The terminology in the Competition Requirements for Grant Policy and Technical Guidance is confusing. Do I have to use these terms in my department’s grant agreements?
Answer: The terms used within the Competition Requirements for Grants Policy and Technical Guidance match the terms used in the Grant Agreement template found on the State Purchasing & Contracts Office (SPCO) website. Departments should begin using the terminology found within the Competition Requirements for Grants Policy and Technical Guidance to avoid confusion and for consistency within the State.

Question: Are the terms “grant agreement” and “grant contract” synonymous?
Answer: No, these terms are not synonymous. In keeping with the Competition Requirements for Grants Policy and Technical Guidance, grants defined under that policy are not contracts. Entities following the grant policy are asked to use the same language/definitions defined within the policy. OMB draws a clear distinction between contracts and grants and the OSC no longer recognizes the term grant contract.
 

Question: Why aren’t terms defined in the technical guidance?
Answer: The Competition Requirements for Grants Policy defines terms used in both the policy and the technical guidance. A statement exists within the technical guidance that reads: “All terms used in this technical guidance that are defined in the Policy shall have the meanings ascribed to them in the Policy.”

Question: How are emergency grant funds addressed by this policy (i.e. Applicants requesting funds for an emergency outside of the normal funding cycle)?
Answer: First, one must determine whether the emergency meets the definition of grant or contract. If a grant, it is assumed competition is not required under the Competition Requirements for Grants Policy and Technical Guidance. If a contract, the Procurement Code must be followed and addresses emergency procurements.

Question: When do I use a grant and when do I use a contract?
Answer: A contract is used for exchange transactions where the contractor is delivering goods or services provided for the direct benefit of the State. Grants are considered non-exchange transactions whereas the awarding agency transfers funds to carry out a public purpose authorized by law. (See the Definitions in section 1 of the policy. Also, use the Subrecipient vs Contractor Determination Tool available on the OSC Website.

Question: What delegation is needed in order to delegate the authority and responsibility for awarding competitive grants?
Answer: The OSC recognizes two different delegations: Controller delegation and Procurement Delegation. The State Controller delegates authority to sign and execute contracts. While the Executive Director of DPA has the authority to delegate purchasing processes and responsibilities, this responsibility has been delegated to the Chief Procurement Officer who sub-delegates the authority to departments. Both of these delegations may be required for awarding competitive grants so check with your procurement official.

Question: Do state funded grant recipients (grantees) have to follow any specific policies or procedures when spending their grant funds?
Answer: Grantees must follow the Competition Requirements for Grants Policy and Technical Guidance (See Level 3 in Appendix 1 of Competition Requirements for Grants Technical Guidance).

Question: What remedies are available to the Subrecipient if federal funds are used but the federal program is silent on the remedies process?
Answer: If the federal award is silent on the remedies method then the Applicant should send their appeal to the Procurement Official of the State Agency making the award(s). (See section titled Reconsiderations in the Competition Requirements for Grants Technical Guidance.) The remedies available in the Procurement Code do not apply to grants.

Question: If a department’s current grant program has a board by statute that makes policies and funding decisions regarding grant awards, does the Procurement Official really have any role in the awarding of a grant?
Answer: The Procurement Official should be made aware within the departments of any boards that are conducting the competitive processes.

Question: Do all federal agencies follow the Uniform Guidance?
Answer: Yes, the Uniform Guidance (UG) is intended to be a government-wide framework for grants management however some federal agency grant programs may be exempt in part from the UG or they may have additional requirements beyond those identified in the UG.

Question: What if a board does not have statutory authority but it is the process that has always been followed within a department regarding how grant awards have been made? Does the Procurement Official still have to conduct the competitive process or can the board be delegated to continue acting as it has been? Can a board be delegated by the Procurement Official or does a delegation have to go to a person? Does the person delegated have to be an employee of the state?
Answer: The department Procurement Official may delegate the competitive process to a board. The board must be in compliance with the Competition Requirements for Grants Policy and Technical Guidance.

Question: If grants are exempted from the procurement code, why does the Competition Requirements for Grants Policy refer to the Procurement Official as the person authorized to conduct a competitive process?
Answer: The grant policy states that the Procurement Official or Program Administrator, if delegated, shall conduct the competitive process unless otherwise specified by law (i.e., statutory authority given to a board) or the Procurement Official has delegated the authority and responsibility of conducting the competitive process to other individuals (such as program staff and/or grant managers). The Procurement Official or Program Administrator if delegated is the subject matter expert on competitive requirements and would likely be involved in the resulting purchase order or Grant Agreement. The Procurement Official or Program Administrator, if delegated, should be made aware within the departments of any boards that are conducting the competitive processes. (See Conducting the Competitive Process in the Competition Requirements for Grants Policy)
 

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