Procurement Management

This grant policy statement provides guidelines and instructions for managing procurement. Grantees will find this policy statement useful when managing grant funded programs.

Recipients may acquire a variety of commercially available goods or services in connection with a grant-supported project or program. States may follow the same policies and procedures they use for procurements from non-Federal funds. All other recipients must follow the requirements in 45 CFR 74.40 through 74.48 or 92.36, as applicable, for the purchase of goods or services through contracts under grants. The requirements for third-party activities involving transfer of substantive programmatic work are addressed under "Subawards" below.

A contract under a grant must be a written agreement between the recipient and the third party. The contract must, as appropriate, state the activities to be performed; the time schedule; the policies and requirements that apply to the contractor, including those required by 45 CFR 74.48 or 92.36(i) and other terms and conditions of the grant (these may be incorporated by reference where feasible); the maximum amount of money for which the recipient may become liable to the third party under the agreement; and the cost principles to be used in determining allowable costs in the case of cost-type contracts. The contract must not affect the recipient's overall responsibility for the direction of the project or program and accountability to the Federal government. Therefore, the agreement must reserve sufficient rights and control to the recipient to enable it to fulfill its responsibilities.

When a recipient enters into a service-type contract in which the term is not concurrent with the budget period of the award, the recipient may charge the costs of the contract to the budget period in which the contract is executed even though some of the services will be performed in a succeeding period if the following conditions are met:

  • The awarding office has been made aware of this situation either at the time of application or through post-award notification.
  • The project has been recommended for a project period extending beyond the current year of support.
  • The recipient has a legal commitment to continue the contract for its full term.

However, costs will be allowable only to the extent that they are for services provided during the period of OPDIV support. To limit liability if continued OPDIV funding is not forthcoming, it is recommended that recipients insert a clause in such contracts of $100,000 or less stipulating that payment beyond the end of the current budget period is contingent on continued Federal funding. The contract provisions prescribed by 45 CFR 74.48 and 92.36(i) (2) specify termination provisions for contracts in excess of $100,000.

In general, the rental costs for facilities and equipment applicable to each budget period should be charged to that period. Recipients are encouraged to consult the GMO before entering into leases that will result in direct charges to the grant project.

"Procurement Management." Head Start Policy Grants Statement. HHS/ACF. 2007. English.

Last Reviewed: April 2008

Last Updated: August 4, 2015