Legislation
OMB Memo Discusses Increased Procurement Thresholds
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The Office of Management and Budget (OMB) recently issued a memorandum to its grant awarding agencies discussing new thresholds for micro and small purchases under the Uniform Grant Guidance.  The memo discusses the statutory provisions which raised these thresholds, and also provides guidance on allowing certain institutions to use even higher thresholds.

In the National Defense Authorization Act (NDAA) of 2017, Congress raised the micro-purchase threshold for institutions of higher education from $3,500 to $10,000.  The NDAA of 2018 applied that to all non-federal entities, and also increased the simplified acquisition threshold from $150,000 to $250,000.  Unfortunately, none of these changes would officially take effect until the federal acquisition regulations (FAR) were updated to reflect the higher thresholds.   

Under 2 CFR § 200.320(a), procurement by micro-purchase can be accomplished without soliciting competitive quotations so long as the non-federal entity considers the price to be reasonable.  To fall into this category, the aggregate dollar amount of the purchase cannot exceed $10,000.  This increase, from $3,500, gives non-federal entities flexibility in selecting contractors for smaller purchases. 

In addition to the increased threshold, OMB is now instructing federal awarding agencies to allow a threshold above $10,000 for institutions of higher education, if approved by the head of the relevant executive agency.  For purposes of this approval, the institution's cognizant federal agency for indirect cost rates will be the relevant executive agency as defined in 2 CFR § 200.19.  To receive a higher threshold, the institution must either have "clean single audit findings," have an acceptable internal institutional risk assessment, or the higher threshold must be consistent with State law for public institutions.

For smaller procurement actions that are above the micro-purchase threshold, 2 CFR § 200.320(b) allows for a slightly more formal process without requiring non-federal entities to go through the full competitive process.  For those purchases above the micro-purchase threshold, up to $250,000, the non-federal entity may use small purchase procedures.  Under these procedures, price or rate quotations must be obtained from an adequate number of qualified sources (at least two). 

In order to allow maximum flexibility for grant recipients in light of these changes, OMB is granting an exception allowing recipients to use the higher thresholds in advance of revisions to the FAR at 48 CFR Subpart 2.1 and the Uniform Guidance.  Pursuant to 2 CFR § 200.102, OMB may allow exceptions to the Uniform Guidance when exceptions are not prohibited by statute. These exceptions became effective as of June 20, 2018 and federal awarding agencies are directed to apply these exceptions to all recipients.  OMB also reminds non-federal entities that use of these thresholds may require updates to establish procurement policies and procedures under 2 CFR § 200.318.  Grantees and subrecipients should update their procedures accordingly.

Author: SAS

About the Author

Steven Spillan is an associate with the Washington, DC law firm of Brustein & Manasevit, PLLC. Established in 1980, the Firm is nationally recognized for its federal education regulatory and legislative practice, providing legal advice regarding compliance with all major federal education programs as well as the federal grants management requirements, including the Education Department General Administrative Regulations (EDGAR). In addition, they work with agencies on federal spending flexibility, allowability, policies and procedures, audit defense and resolution and legislative updates. The Firm provides government relations services for the National Title I Association.