Key Facts
- Governed by 2 CFR 200.317–200.327 — procurement standards that apply to all non-federal entities when purchasing goods or services using federal award funds.
- Micro-purchase threshold: $10,000 — no competition required; costs must be reasonable and distributed equitably among qualified suppliers when practicable.
- Simplified acquisition threshold: $250,000 — purchases between $10K and $250K require informal competition: price/rate quotations from an adequate number of qualified sources (typically a minimum of three).
- Above $250,000: formal competitive procurement required — sealed bids or competitive proposals with public solicitation, written specifications, and documented evaluation criteria.
- Sole-source only in 4 circumstances under 2 CFR 200.320(c) — single source availability, public emergency, federal agency authorization, or inadequate competition after solicitation. All require written justification before contract award.
Summary
Every dollar of federal grant funds that leaves your organization and goes to a vendor, consultant, or contractor must arrive there through a procurement process that meets federal standards — regardless of how small the purchase or how trusted the vendor. The Uniform Guidance procurement rules (2 CFR 200.317–200.327) are among the most frequently violated requirements in federal grant compliance, not because organizations are trying to circumvent competition, but because they don't know the thresholds have changed, don't understand when informal competition is sufficient, or assume that their existing vendor relationships preempt the need for competitive processes. The 2020 revision to the Uniform Guidance raised the micro-purchase threshold from $3,500 to $10,000 and the simplified acquisition threshold from $150,000 to $250,000 — many organizations are still operating under the old numbers.
The Three Procurement Tiers — What Each Requires
Micro-purchases (up to $10,000). Purchases at or below $10,000 may be awarded without soliciting competitive quotations, provided the price is considered reasonable and — to the extent practicable — procurement is distributed equitably among qualified suppliers. "Reasonable price" doesn't mean you can pay anything without justification; it means the price paid is consistent with market rates. Keep documentation that supports your reasonableness determination: a screen capture of comparable vendor pricing, a published price list, or a brief note from a person familiar with the market. Rotating purchases among multiple vendors when possible demonstrates the equitable distribution requirement.
Simplified acquisition (above $10,000 up to $250,000). For purchases in this range, 2 CFR 200.320(b)(1) requires informal competition — obtaining price or rate quotations from an adequate number of qualified sources. Federal guidance generally treats three quotations as the minimum for "adequate" competition, though this is not an explicit regulatory number. The three quotes must be from genuinely different sources — three quotes from subsidiaries of the same parent company, or three quotes from vendors who all share the same pricing catalog, do not satisfy the spirit of the requirement. Document the solicitation, the responses, and the basis for selecting the winning vendor.
Formal competitive procurement (above $250,000). Contracts exceeding the simplified acquisition threshold require a formal competitive process: publicly advertised solicitation, written specifications that describe requirements clearly enough to allow meaningful competition, and documented evaluation criteria applied consistently to all responses. Two methods are permitted: sealed bidding (price is the primary evaluation criterion, used when specifications are complete and defined) and competitive proposals (technical evaluation factors are part of the selection, appropriate for professional services). Award must go to the offeror whose proposal is most advantageous to the program, with price and other factors considered.
Sole-Source Procurement: The Four Authorized Justifications
Noncompetitive procurement — awarding a contract to a single vendor without soliciting competition — is permitted under 2 CFR 200.320(c) only when one of four conditions is met, and the justification must be documented before the contract is executed:
1. Single-source availability. The item is available only from one source. This is a narrow exception — it does not mean "only one company offers this specific product." It means no other product exists that could meet the program requirement. A vendor claiming their product is unique is not sufficient justification; you must document why no comparable product or service from another source would meet your program's needs.
2. Public exigency or emergency. Competition would cause an unacceptable delay that would endanger life, property, or vital program interests. This is reserved for genuine emergencies — not administrative convenience, not a missed deadline, not "we need this fast." Document the specific emergency and why it required immediate procurement without competition.
3. Federal awarding agency authorization. The awarding agency expressly authorizes noncompetitive procurement in response to a written request from the recipient. This requires affirmative written approval from the federal grants officer — not an assumption that the agency won't object.
4. Inadequate competition after solicitation. After soliciting several sources, competition was determined to be inadequate. If you issued a solicitation and received only one responsive bid, or the bids received were all above market price, you may proceed noncompetitively — but document the solicitation, the responses, and your determination of inadequacy.
GrantMetric Analysis
- The most common procurement finding isn't fraud — it's piggybacking without authorization. "Piggybacking" is the practice of using another entity's existing contract to procure goods or services — for example, buying equipment through the GSA Federal Supply Schedule, a state purchasing cooperative, or another organization's existing vendor contract. Piggybacking is allowable under 2 CFR 200.318(e) when the original contract was competitively awarded and the contract specifically allows for cooperative purchasing. Using a state purchasing cooperative contract that was opened to other purchasers when it was issued satisfies the competition requirement. But purchasing off a contract that was competitively awarded for another entity's specific needs — without that contract including cooperative purchasing provisions — is a procurement violation. Auditors specifically test whether the piggybacked contract's terms permitted use by third parties.
- Contract splitting to avoid competition thresholds is a disallowable practice and an OIG referral risk. Breaking a $60,000 purchase into six $9,999 purchases to stay under the micro-purchase threshold — whether intentional or through poor planning — violates 2 CFR 200.318 and potentially constitutes fraud against the federal government. Auditors look for patterns of purchases to the same vendor in amounts just below applicable thresholds. The test applied: would these purchases reasonably have been combined into a single procurement at the time the need arose? If yes, the threshold applies to the aggregate. Organizations should aggregate anticipated purchases from the same vendor for the same general purpose over the grant period and apply the appropriate competition requirement to the total.
Conflict of Interest in Procurement
2 CFR 200.318(c) requires every non-federal entity to maintain written standards of conduct covering conflicts of interest in procurement decisions. At minimum: no employee, officer, agent, or board member may participate in the selection, award, or administration of a contract if they have a real or apparent conflict of interest — meaning a financial or other interest in any organization considered for the contract.
The practical requirement: if a board member's company responds to an RFP you issued, that board member must recuse themselves from all evaluation and award decisions. More importantly, the board member's company should only participate if the procurement was genuinely competitive and the selection process was independent of the board member's organizational role. Using a board member's company without disclosing the relationship, even if the price was competitive, is a violation. The required disclosure must go to the federal awarding agency before the contract is executed.