Redpath Insights

Financial-Memorandum-for-Federal-Awardees-7-10-18

Financial Memorandum for Federal Awardees

by Melissa Johnson

On June 20, 2018, the Office of Federal Financial Management issued a memorandum for Chief Financial Officers and Heads of Small Executive Agencies to implement statutory changes to the micro-purchase and the simplified acquisition thresholds.  The memorandum implements the provisions of the National Defense Authorization Acts (NDAA) for FYs 2017 and 2018, directs agencies to implement these changes in the terms and conditions of their awards, and allows recipients of federal awards to implement these changes in their internal controls.

Procurement Threshold Changes

Section 806 of the NDAA for FY 2018, Pub. L. No. 115-91, which became law on December 12, 2017, raised the micro-purchase threshold from $3,500 to $10,000, and section 805 raised the simplified acquisition threshold from $100,000 to $250,000.  OMB intends to revise the Uniform Guidance to conform with the law.  In the interim, OMB granted an exception, effective June 20, 2018, allowing recipients to use the higher threshold of $10,000 for micro-purchases and $250,000 for simplified acquisitions in advance of the revisions to the Federal Acquisition Regulation (FAR) at 48 C.F.R. Subpart 2.1 and the Uniform Guidance.  Recipients of federal awards should document any change to its micro-purchase and simplified acquisition thresholds in accordance with 2 C.F.R. Section 200.318 (general procurement standards).

Takeaway  

We suggest organizations receiving federal awards review their current procurement policies and procedures to consider the updated federal micro-purchase and simplified acquisition thresholds in their procurement practices.  Any changes to procurement thresholds should be documented in organizations’ procurement policies.  Minnesota governmental entities should continue to ensure its policies and procedures still comply with the Uniform Municipal Contracting Law under Minnesota Statute Section 471.345, which require purchases over $175,000 to still follow a sealed bid or competitive bidding process—a new limit effective starting 8/1/2018, up from the present limit of $100,000.

Melissa Johnson

Melissa Johnson