Amidst the wave of new federal financial awards and grants, the OMB has also issued some key revisions to the OMB Guidance for Grants and Agreements (Uniform Guidance). Some of the most notable changes impact the federal procurement procedures and applicable thresholds.
Federal Uniform Guidance (UG) requires that nonfederal entities must have and use documented procurement procedures consistent with 2CFR § 200.317-320 for the acquisition of property or services required under a federal award or sub-award. Effective August 31, 2020, the federal micro-purchase threshold, which is the threshold that allows for procurements without soliciting competitive price or rate quotations given certain conditions, was increased from $3,500 to $10,000 in the Federal Acquisition Regulations (FAR). In addition, the simplified acquisition threshold, which requires formal procurement methods like sealed bids and proposals, increased from $100,000 to $250,000. Minnesota local governments must also consider state or local procurement laws and policies, which could be in conflict with the FAR.
Effective November 12, 2020, the UG was also revised to allow nonfederal entities to establish a micro-purchase threshold higher than the $10,000 threshold established in the FAR under certain circumstances. The nonfederal entity may self-certify a micro-purchase threshold up to $50,000 if the requirements in 2CFR § 200.320(a)(1)(iv) are followed. Requirements include an annual self-certification and clear documentation of the justification to support the increase in the threshold. Acceptable reasons for justification must meet one of the following criteria:
- A qualification as a low-risk auditee, in accordance with the criteria in §200.520 for the most recent audit,
- An annual internal institutional risk assessment to identify, mitigate, and manage financial risks, or,
- A higher threshold consistent with state law.
This flexibility would allow Minnesota local governments to increase and align their federal procurement procedures, specifically the micro-purchase threshold, with state law or local policies, which allows for procurements below $25,000 to be made without competitive price or rate quotations.
We recommend that Minnesota local governments review their current federal procurement policies. If the micro-purchase threshold in your currently adopted policy is below the allowable FAR limit of $10,000, you would need to make a one-time amendment to the policy to adopt the $10,000 FAR limit before using it. If you prefer to increase your federal micro-purchase threshold to $25,000 to align it with state law, in addition to amending your federal procurement policy, you would need to annually certify the higher threshold and the justification for using the higher threshold. Additionally, we recommend an increase in the simplified acquisition threshold to $175,000 to align with Minnesota bid laws. As a reminder, when federal requirements, state laws, or local policies are in conflict with one another, you must use the lowest threshold.
Contact us for more information or to discuss your specific procurement policies.
