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Management Bulletin 20-08


Early Learning and Care Division

Subject: COVID-19 Guidance on Procurement and Audits

Number: 20-08

Date: April 2020

Expires: June 30, 2020, or unless rescinded

Authority: Senate Bill 117 (Chapter 3, Statutes of 2020)

Attention: All Executive Officers and Program Directors of California Department of Education Early Learning and Care Programs


Purpose

This Management Bulletin (MB) is to notify and provide guidance to state-subsidized Early Learning and Care Division (ELCD) programs about temporary changes to the requirements related to the procurement of goods or services and changes to contract audit timelines after the enactment of Senate Bill (SB) 117 (Chapter 3, Statutes of 2020).

It is important to note that this is not a permanent change to statute or regulations. These requirements will apply until June 30, 2020, unless nullified or changed by the Legislature, or this MB is rescinded. As needs evolve and more information is available, the California Department of Education (CDE) will issue (updates) additional guidance.

Background and Authority

The California Education Code (EC) and California Code of Regulations, Title 5 (5 CCR), currently sets the standards for the approval processes for purchases requiring a competitive procurement of equipment, goods and services utilizing state and federal funds as follows:

5 CCR Section 18013(s) defines “Reasonable and necessary costs” as expenditures that, in nature and amount, do not exceed what an ordinarily prudent person would incur in the conduct of a competitive business.

5 CCR Sections 18027–18030 requiring private contractors to obtain at least three (3) bids or estimates for subcontracts that exceed the amount stated for subcontract bid requirements in the annual child development contract, state that ELCD prior approval is needed, that copies of all bids are submitted, including the line item budget of the proposed subcontract, and that the ELCD has 30 days to approve/disapprove after receipt of all documentation.

5 CCR Section 18033 states that contractors will be reimbursed for actual costs that are reasonable and necessary to the performance of the contract.

5 CCR Section 18040 states that private contractors shall obtain at least three (3) bids or estimates when expenditures for equipment, equipment replacement, and improvements exceed the level specified in the annual child development contract.

Code of Federal Regulations, Title 2 (2 CFR), Section 200.319(c), requires contractors to have written policies and procedures in place and implement policies to ensure that the price of the goods and services is the competitive market price. All procurements must be supported by documentation that verifies compliance with state and federal rules.

2 CFR Section 200.320(a) refers to the acquisition of supplies or services, whereas the aggregate dollar amount does not exceed $10,000, and can be awarded without soliciting competitive quotations if the CDE considers the price to be reasonable.

2 CFR Section 200.320(b) requires that “price or rate quotations be obtained from an adequate number of qualified sources.” This includes purchases from $10,000 to $250,000.

On March 17, 2020, the Governor signed SB 117 (Chapter 3, Statutes of 2020) which includes provisions to ensure continuity of payments to state-subsidized early learning and care programs, subject to guidance from the State Superintendent of Public Instruction (SSPI).

This new law allows the SSPI to develop directives to modify, as necessary, contractual reporting requirements applicable for FY 2019-20 state-subsidized early learning and care programs impacted by COVID-19. This authority applies to Fiscal Year (FY) 2019-20 and the following programs: Alternative Payment Program (CAPP), Migrant Child Care (CMIG and CMAP), California State Preschool Program (CSPP), General Child Care (CCTR), Family Child Care Home Education Networks (FCCHEN), Care for Children with Severe Disabilities (CHAN), and CalWORKs Stages 2, and 3 (C2AP, and C3AP) programs.

The guidance below responds to this topic.

Policy

Effective March 17, 2020, the CDE will be flexible with the preapproval and bidding requirements for procurement of equipment purchases, leases, replacements and improvements on all purchases under $10,000 related to COVID-19 through June 30, 2020. Also, contract audit due dates will be extended three (3) months from the normal due date.

Directive

Flexibility for Agency Preapproval Requirements Under Funding Terms and Conditions for Procurement for Purchases

If a contractor needs to purchase equipment or replacements, enter into leases, or make improvements, flexibility of the pre-approval requirements is allowed under the following conditions:

  • The purchase is related to the COVID-19 declared State of Emergency, the pre-approval requirements will be waived through June 30, 2020.
  • The per-unit cost equals or exceeds $5,000 and is less $10,000.
  • The sum of the purchase is under $10,000.
  • The purchases are reasonable, necessary and allocable to the child development program, and providing the necessary services to eligible children.

NOTE: This flexibility with preapproval requirements does not include purchases over $10,000. All purchases over $10,000 will require the submission of three (3) bids and the process of approval by the CDE, per 2 CFR Section 200.320(b). This includes purchases from $10,000 to $250,000.

If a contractor needs to purchase equipment or replacements, enter into leases, or to make improvements not related to the COVID-19 declared State of Emergency, the contractor must adhere to all applicable laws and regulations related to the Pre-Approval Requirements as cited in the FT&C’s.

Obtaining Bids for Equipment Purchases, Leases, Replacements and Improvements for Private Agencies

If a contractor needs to purchase equipment or replacements, enter into leases, or make improvements with a per-unit cost that equals or exceeds $5,000 or the sum of the purchase is less than $10,000 and the purchase is related to the COVID-19 declared State of Emergency and contractor has the ability to secure three (3) bids, the CDE encourages them to do so.

As a reminder, per the FT&C’s if three (3) bids or estimates cannot be obtained, the contractor shall provide adequate documentation of the reason(s) why three (3) bids or estimates could not be obtained (e.g. an emergency situation, or the item is only available from a single source).

If a contractor needs to purchase equipment or replacements, enter into leases, or make improvements not related to the COVID-19 declared State of Emergency, the contractor must adhere to all applicable law and regulations to the Obtaining Bids as cited in the FT&C’s.

Contractors must keep all documentation regarding equipment purchases, leases, replacements, and improvements and abide by their internal control policies and procedures.

All contractors are ultimately responsible for ensuring that all costs are reasonable, necessary and allocable to the child development program, and providing the necessary services to eligible children.

The CDE will continue to monitor the state declared State of Emergency related to COVID-19, and will issue further guidance on reporting requirements where necessary.

The request form CD-2703 (5 CCR Section 18040) may be found via this link https://www.cde.ca.gov/sp/cd/ci/documents/cd2703.pdf.

Audit Extension for Contractors and Subcontractors

Contractors and subcontractors that have not yet submitted their audits as of the date of this MB that have fiscal year-ends through June 30, 2020, may delay the completion and submission of the audit, as required under California EC Section 8448 and 5 CCR Section 18071, to three (3) months beyond the normal due date. This extension is in lieu of extensions delineated in 5 CCR, Section 18073(b), and does not require contractors and subcontractors to seek approval for the extension by the cognizant or oversight agency for audit; however, contractors should maintain documentation of the reason for the delayed filing.

CDE Reporting Forms

The Child Development and Nutrition Fiscal Services (CDNFS) report forms will remain unchanged. All revenue and expenses related to the program that are reimbursable by the contract should be reported on the first fiscal page of the Attendance and Fiscal report. If you have any questions related to the reporting of revenue and/or expenses, please contact your assigned CDNFS Fiscal Analyst. The CDE Fiscal Apportionment Analyst Directory web page can be found at https://www.cde.ca.gov/fg/aa/cd/faad.asp.

Other Relevant Information

The CDE Early Learning and Care Division has developed a COVD-19 guidance and resource page that includes answers to frequently asked questions, all management bulletins issued to implement pertinent legislation, and other relevant resources at https://www.cde.ca.gov/sp/cd/re/elcdcovid19.asp.

To be informed of the updated information, please sign up for Early Learning and Care Division's email list at https://www.cde.ca.gov/sp/cd/ci/progspeclist.asp.

The CDSS Community Care Licensing Division has developed Provider Information Notice (PIN) 20-04-CCP, which provides a statewide waiver for operation of child care facilities, including licensees, registered TrustLine providers, and temporary employer sponsored child care, along with guidance for the implementation of prevention, containment, and mitigation measures for COVID-19. This PIN can be found on the CDSS website at https://www.cdss.ca.gov/inforesources/community-care-licensing.

For more information about federal and state guidance and response to COVID-19, please refer to the CDC website at https://www.cdc.gov/coronavirus/2019-ncov/community/schools-childcare/index.html, the California Department of Public Health’s website at https://www.cdph.ca.gov/Programs/CID/DCDC/Pages/Immunization/ncov2019.aspx, and the California COVID-19 Response website at https://covid19.ca.gov/.

If you have any questions regarding the information in this management bulletin, please contact your assigned ELCD Regional Consultant. A list of ELCD Regional consultants can be found at https://www.cde.ca.gov/sp/cd/ci/assignments.asp or by phone at 916-322-6233.

______________________________
Stephen Propheter, Director
Early Learning and Care Division

Questions:   Early Learning and Care Division | 916-322-6233
Last Reviewed: Friday, April 17, 2020
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