The procurement requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), are now effective for most nonfederal entities. As a reminder, due to significant changes in the Uniform Guidance procurement requirements, the Office of Management and Budget (OMB) allowed entities to delay the requirement to implement those Uniform Guidance provisions for a full three years from the effective date. For example, if a nonfederal entity has a June 30 year-end, the first year the procurement standards under the Uniform Guidance are applied is fiscal year 2019 (July 1, 2018, through June 30, 2019).
On June 20, 2018, OMB issued memorandum M-18-18, “Implementing Statutory Changes to the Micro-Purchase and the Simplified Acquisition Thresholds for Financial Assistance,” to implement the effect of the National Defense Authorization Acts (NDAA) of 2017 and 2018 on the procurement micro-purchase and simplified acquisition thresholds under the Uniform Guidance. The memorandum issued is intended to provide guidance to the federal agencies in carrying out the increase in thresholds. It also addresses the timing of when recipients of existing federal grants and contracts can apply the threshold changes as described in the memorandum.
NDAA of 2017
The memorandum clarifies that the increase in the micro-purchase threshold to $10,000 for procurements under grants and cooperative agreements for institutions of higher education, or related or affiliated nonprofit entities, nonprofit research organizations or independent research institutes (referred to herein as covered entities), was effective December 23, 2016. It also establishes a process for covered entities to request an even higher threshold. Federal agencies are instructed to reflect the micro-purchase threshold change for covered entities in policy or terms and conditions of awards.
NDAA of 2018
The memorandum also states that increases to the micro-purchase threshold to $10,000 and the simplified acquisition threshold to $250,000, for all recipients of federal grants and contracts, are effective upon the issuance of the OMB memorandum—the date appearing on the memorandum is June 20, 2018. It instructs agencies to apply this exception to all recipients, and recipients should document any change based on this exception in accordance with Section 200.318, “General Procurement Standards,” of the Uniform Guidance.
Documentation in internal procurement policies of the thresholds used is very important. If nonfederal entities have questions about what procurement thresholds should be used, they’re encouraged to reach out to their federal cognizant or oversight agency. Contact Lindsey or your trusted BKD advisor with other questions.