Want an easy way to remember the five procurement methods under the new grant regulations–2 CFR Part 200–also known as the “Super Circular” or Uniform Guidance?
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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 June 20, 2018, the Office of Management and Budget (OMB) implementing statutory changes to the micro-purchase and the simplified acquisition thresholds for financial assistance.
These changes were authorized by the National Defense Authorization Act (NDAA) for FY 2018, Pub. L. No. 115-91, which became law on December 12, 2017. Federal grant recipients need to be aware of these changes and may need to update their procurement rules accordingly.
This memorandum from OMB clarified several points regarding the new procurement rules as part of the implementation of 2 CFR Part 200–also known as the “Uniform Guidance.”
And though you will not see these changes in 2 CFR Part 200 quite yet, OMB does intend to revise the Uniform Guidance to conform with the law.
The new regulations break down procurements into five purchasing methods:
Method #1: Micro-Purchase-Under $3000 Now $10,000 Unless…
Micro-purchases are the simplest and most informal of the procurement methods in the new grant guidance.
Here are the main points:
- Purchases are not to exceed
$3000Now $10,000 ($2,000 for purchases subject to Davis-Bacon Act) - No quotations required if the price is reasonable
- To extent practicable, distribute purchases equitably among qualified suppliers
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: Competitive Proposals-Over $250,000
Just 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-Any Size Purchase
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.
- This non-competitive method is available for procurements of any dollar amount
- Because there is no competition it must be authorized by agency (or Pass-through entity-for sub-recipients)
There are exceptions to pre-approval such as certain unique circumstances or a public emergency.
These Rules Apply To All Purchases
Regardless of the size of the purchase, these 5 characteristics must be met:
Rule #1:
The purchase must comply with the non-Federal entity’s documented procurement procedures
Rule #2:
The purchase must be necessary to carry out the Federal award.
Rule #3:
The purchase must be made with open competition to the extent required.
Rule #4:
The organization is in compliance with their conflict of interest policy.
Rule #5:
The purchase documentation contains sufficient and proper history of the purchase.
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Author:
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.
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