CSLFRF Purchasing and Procurement FAQs
Unless otherwise stated, local governments' use of recovery funds is subject to the Uniform Guidance from the date of the award until December 31, 2026 when the period of performance ends (Final Rule pp. 4438). Recipients must also develop internal controls to ensure that uses of fiscal recovery funds are eligible under the Treasury Department’s guidance (Compliance and Reporting Guidance, pp. 7).
Local government recipients must ensure that all procurement using fiscal recovery funds is consistent with the procurement standards set in the Uniform Guidance. The Uniform Guidance requires that all procurement transactions should provide full and open competition for contracts. Recipients may not, for example, require unnecessary experience or place unreasonable requirements on firms to be eligible for contracting (2 CFR 200.319). Procurement can be noncompetitive in some circumstances, such as when an item is only available from a single source or when a competitive procurement process would take too long to properly address an emergency (2 CFR 200.320).
The Uniform Guidance also requires that recipients have and use documented procurement procedures (2 CFR 200.318). These procedures must be consistent with the Uniform Guidance’s procurement standards identified in 2 CFR 200.317 through 200.327, including maintaining a written conflict of interest policy and maintaining oversight over contractors (2 CFR 200.318).
While the Uniform Guidance typically requires recipients of federal funds to remit interest earned on federal payments (2 CFR 200.305), recipients of fiscal recovery funds are exempt from this requirement (Compliance and Reporting Guidance, pp. 9). Local governments may place recovery funds in interest-bearing accounts, are not required to remit interest to the Treasury Department, and can use the interest for purposes beyond the eligible uses of recovery funds (Compliance and Reporting Guidance, pp. 9).
Local government recipients must monitor a subrecipient’s activities to ensure that it uses fiscal recovery funds in line with the Treasury Department’s guidance and all other applicable laws and policies (2 CFR 200.332).
Prior to granting a subaward to a subrecipient, prime recipients are responsible for communicating to subrecipients that they are receiving a subaward of federal fiscal recovery funds (2 CFR 200.332). Prime recipients must also communicate all applicable federal compliance and reporting requirements (2 CFR 200.332). Prime recipients must evaluate subrecipients’ risk of noncompliance based on factors such as prior experience with federal subawards or results of previous audits (2 CFR 200.332).
Generally, recipients and subrecipients that expend more than $750,000 of any federal funds in a single fiscal year are subject to an audit under the Single Audit Act (2 CFR 200, Subpart F). Neither contractors nor beneficiaries are subject to audit.
The Office of Management and Budget recently released an addendum to the Single Audit Act that exempts certain recipients from the requirements of the Single Audit Act (87 FR 20693). Certain recipients can opt for an attestation engagement examination, which is less burdensome than a full-blown single audit. To be eligible for attestation, recipients must meet two requirements. First, recipients could not have received more than $10 million in fiscal recovery funds. Second, excluding fiscal recovery funds, recipients cannot have spent more than $750,000 in other federal awards in a single year.
Only recovery funds spent under the revenue loss category can meet non-federal cost-share or matching requirements except as provided for by statute. For instance, the Infrastructure Investment and Jobs Act allows local government recipients to use fiscal recovery funds to meet non-federal match requirements even outside of the revenue loss category.
Some programs do not permit the use of fiscal recovery funds to cover non-federal match or cost-share requirements. For instance, fiscal recovery funds cannot cover non-federal shares of a state’s Medicaid and CHIP programs. To verify that fiscal recovery funds can satisfy the non-federal share of a given program, recipients should check 2 CFR 200.306(b) of the Uniform Guidance and a program’s relevant statutory and regulatory provisions.
Treasury defines “capital expenditures” in line with 2 CFR 200.1 of the Uniform Guidance (Final Rule pp. 4393). Capital expenditures are “‘expenditures to acquire capital assets or expenditures to make additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations, or alterations to capital assets that materially increase their value or useful life.’’
Treasury defines “capital assets” in line with 2 CFR 200.1 of the Uniform Guidance (Final Rule pp. 4393). Capital assets are ‘‘tangible or intangible assets used in operations having a useful life of more than one year which are capitalized in accordance with [Generally Accepted Accounting Principles].’’ These include land, facilities, equipment, and intellectual property.