We’ve got a cool poster for you
- Download Your Procurement Bear Claw Poster Image for sharing
- Download Your Procurement Bear Claw Poster High-Quality .pdf for printing(Warning-this is a large file.)
It makes it easy to get the five procurement methods at-a-glance.
Here is some additional information on the five methods…
5 Procurement Methods
On August 13, 2020, the Office of Management and Budget (OMB) incorporated statutory changes to the micro-purchase and the simplified acquisition thresholds into 2 CFR Part 200.320 for financial assistance.
Federal grant recipients need to be aware of these changes and may need to update their procurement rules accordingly.
The updates from OMB clarified several points regarding the federal procurement rules for awards as part of the implementation of 2 CFR Part 200–also known as the “Uniform Guidance” to conform with the law
The federal grant regulations break down procurements into five purchasing methods:
Method #1: Micro-Purchase-Now $10,000 Unless…
Micro-purchases are the simplest and most informal procurement methods in the federal grant guidance.
Here are the main points:
- Purchases are not to exceed $10,000 (unless your organization adopts a lower limit)
- No quotations are required if the price is reasonable, based on research, experience, purchase history, or other information that is adequately documented
- To the extent practicable, distribute purchases equitably among qualified suppliers
Some organizations may choose to adopt higher micro-purchase thresholds consistent with 2 CFR Part 200.320 (a).
Method #2: Small Purchase-Under $250,000
With purchases under the simplified acquisition rules (now $250,000), the process is still relatively simple, and there are not extensive bidding requirements.
- Purchases are up to $250,000 (the limit for the simplified acquisition rules)
- Get rate quotations from an adequate number of qualified sources (Note, your written procurement procedures should define what is meant by “adequate,” for example, more than one.)
- No cost or price analysis is required for purchases under the simplified acquisition limit
Method #3: Sealed Bid-Over $250,000
Once you start making purchases over $250,000, the process gets more complicated and formalized.
- Purchases are over $250,000
- Primarily used in construction projects, such as a firm fixed price contract
- Price is a major factor, and a formal process for bidding is generally required
Method #4: Proposals (also known as “Competitive” Proposals) – Over $250,000
Like the sealed bid method, competitive proposals mean more requirements and documentation.
- Purchases are over $250,000
- Use contracts such as fixed price or cost reimbursement
- Formal Request for Proposal (RFP) with pre-determined evaluation methods for an adequate number of qualified sources
Method #5: Sole Source-Must Meet Specific Criteria
Sometimes because of the uniqueness of the goods or services or the immediacy of the need, competition is NOT as open as we would wish in the procurement process. If these cases, the sole-source method must be followed as long as specific criteria are met, specifically:
- The total cost of the property or services purchase does not exceed the micro-purchase threshold (currently $10,000)
- The goods or services are available only from a single source
- There is a public necessity or emergency for the items that will not allow for anticipated delays that could result from seeking competitive solicitations
- Either the federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the award recipient or subrecipient
- Competition is found to be inadequate after soliciting some possible sources for the goods or services.
These Rules Apply To All Purchases
Regardless of the size of the purchase, these 5 characteristics must be met:
The purchase must comply with the non-Federal entity’s documented procurement procedures
The purchase must be necessary to carry out the Federal award.
The purchase must be made with open competition to the extent required.
The organization complies with its conflict of interest policy.
The purchase documentation contains a sufficient and proper history of the purchase.
Ready to Improve Your Grant Management?
How about you?
Would you like to be a better grant manager?
We have another grant management training seminar coming soon.
Click here to get all the details!
Hope to see you there!
Lucy Morgan CPA, MBA
CEO, Compliance Warrior
Author of “Decoding Grant Management-The Ultimate Success Guide to the Federal Grant Regulations in 2 CFR Part 200” The 2nd Edition is now available on Amazon in Paperback and Kindle versions.