Federally qualified health centers, Ryan White clinics, hemophilia treatment centers and other federal grantees and subgrantees are subject to new requirements governing how they solicit and procure contracts with outside entities starting this year. 

Issued by the Office of Management and Budget (OMB) as part of its 2014 Uniform Administrative Requirements, Cost Principles, and Audit Requirements, the new requirements are effective for grantee fiscal years beginning on or after December 26, 2017. OMB previously delayed the effective date of the new requirements, but the new rules are now effective.

These new requirements impose stringent responsibilities on grantees and subgrantees when they seek to enter into a contract with an outside entity.  While grantees have been subject to regulations governing contract procurements for some time, these new requirements are more onerous than the previous rules. For example, for most contracts with a value of more than $150,000, the grantee has to advertise for sealed bids or solicit competitive proposals before selecting a vendor.  Grantees can avoid these requirements and enter into a “sole source” contract, but only if certain requirements are met. Some post-contract requirements apply regardless of the amount of the contract.

It is important for federal grantees and subgrantees, as well as the vendors that contract with such entities, to be aware of these new regulations so they can understand if the new requirements apply to a particular contract.  For example, grantees and subgrantees that participate in the federal 340B drug discount program will want to consider the applicability of these new requirements when they enter into contract pharmacy arrangements or agreements with 340B administrators and consulting firms.

For more information, please contact Barbara Straub Williams at Barbara.Williams@PowersLaw.com or 202-872-6733, Bill von Oehsen at William.vonOehsen@PowersLaw.com or 202-872-6765, or Shuchi Parikh at Shuchi.Parikh@PowersLaw.com or 202-872-6759.