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Because the Community Development Block Grant-Disaster Recovery (CDBG-DR) program is federally funded, grantees must follow federal procurement policies when issuing contracts for goods and services using program funds. These can be easy to overlook in the urgency to rebuild after a natural disaster, especially for the many localities that have little to no experience with federal procurement policies.

As the accounting/finance director, it’s important that you know what to expect to avoid delays and ensure program compliance. Below, IBTS CDBG-DR program management experts highlight common points of confusion and offer a primer for accounting/finance staff new to the federal rules and regulations.

Before beginning the procurement process, you must have a written procurement policy.

• The first step is to implement a written policy that is in compliance with all local, state and federal procurement requirements.
• Consider hiring a consultant to review your procurement policy for compliance with federal rules. If your policies are noncompliant, you may have to repay your CDBG-DR funds.
• IBTS recommends third-party Quality Assurance/Quality Control oversight throughout the procurement process to ensure compliance.

CDBG-DR grantees are typically required to get at least three quotes for each procurement.

• When selecting a contractor under federal procurement rules, you must prove the reasonableness of the proposed cost. This is defined by HUD as “what a prudent businessperson would pay.” Having multiple bids helps you establish your cost-reasonableness metrics.
• If you are unable to get three quotes you still must prove that you tried by providing detailed records of procurement activities.

Procurements must be awarded on a competitive bid basis.

• This doesn’t mean the grantee has to take the lowest price, but you must issue an official solicitation that gives every contractor an equal opportunity to bid.
• In post-disaster chaos, a common mistake made by grantees unfamiliar with federal procurement rules is hiring a contractor they have a pre-existing relationship with instead of putting a solicitation out and going through the procurement process.

Contractors must be registered in the System for Award Management (SAM). 

• Any contractor procured to work on a federally funded project, including activities funded by the CDBG-DR program, are required to be registered in SAM.
• Check on Sam.gov to make sure the contractors you procure are registered, or ensure they register before contracting.

Be sure to check the federal debarment list before awarding any contracts.

• The U.S. Department of Labor maintains a database of contractors prohibited from receiving federally funded contracts due to violations on previous contracts. You will be found non-compliant if you select a contractor from this list.
• You can check contractors’ status using Sam.gov’s search records portal.

If your procurement policies are found noncompliant, common actions taken by the Office of Inspector General include:

• Documentation
• Repayment
• Development of a procurement policy and procedures
• Training

For more information, see HUD’s CDBG-DR and Procurement: A Guide to Recovery and IBTS’s presentation on CDBG-DR procurement.