UPDATE – The micro purchase and simplified acquisition thresholds have been amended since this blog was written. See the blog post titled OMB Raises Micro-Purchase and Simplified Acquisition Thresholds for more details.
Small purchase procedures will likely be one of the most heavily used methods of procurement by federal grant recipients who need to comply with the Uniform Guidance. It covers a wide range of purchases whose amounts fall between very small (micro-purchases) and those that are large.
Here’s a breakdown of small purchase procedures and the related requirements you’ll need to follow.
Definition of Small Purchase Procedures
Small purchase procedures are those “relatively simple and informal procurement methods for acquiring services, supplies, or other property”. Practically, they include procurements that fall between the micro-purchase threshold and the Simplified Acquisition Threshold (SAT).
For many federal grant recipients, the dollar range for using small purchase procedures will fall between $3,500, the current micro-purchase threshold set in the FAR, and $150,000, which is the current Simplified Acquisition Threshold for most procurements. However, there are exceptions to both.
The micro-purchase threshold can be higher for certain types of organizations, and the SAT has a few exceptions related to procurements for certain contingency operations, for defense of military or, terrorist attacks, and for operations to be used to support humanitarian or peacekeeping operations outside of the United States.
The bottom line here is to be clear about both the micro-purchase and SAT thresholds for your organization as they’ll determine what qualifies as a small purchase for you.
Specific Requirements for Small Purchase Procedures
Small purchase requirements are pretty simple: you must obtain price or rate quotations an from an adequate number of qualified sources. The guidance leaves it up to you to determine what is “adequate” in terms of the number of quotes you solicit.
When you do request bids you can obtain them orally, electronic or in writing. Just make sure you document your process. In most cases simply documenting the names of the suppliers contacted, the prices and other terms and conditions quoted by each and the identification of the winning bidder will suffice.
Other Procurement-Related Considerations
- Some other key considerations include the following:
- There can be no conflicts of interest by employees, officers or agents who are engaged in the selection, award and administration of the contract with the winning bidder.
- A contract can only be awarded to a responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement. It’s important that you perform the appropriate level of due diligence to consider such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources.
- The contractor cannot be on the System for Award Management (SAM) excluded parties list.
- You must take all necessary affirmative steps to assure that minority businesses, women’s business enterprises, and labor surplus area firms are used when possible.
- The contract that is ultimately awarded to the winning bidder must contain the applicable provisions described in Appendix II to Part 200—Contract Provisions.
Remember that even though the requirements for small purchases are relaxed when compared to other procurement methods, it is still important to have well documented, well communicated policies, procedures and controls in place. These will help to not only assure compliance with the Uniform Guidance, but also reduce risk and minimize the potential for fraud and misuse.
Author: Tom Rogers
Job Title: CEO
Organization: Vendor Centric
Tom is the founder and CEO of Vendor Centric, he has been a trusted advisor to nonprofit organizations for 30 years, with a focus on helping them align the right people, processes and systems to mitigate third-party risk and drive more value from third-party contracts and relationships.