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Uniform Guidance: Procurement Standards and Methods

August 8, 2018

John Eusanio, CPA, CGMA

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In December 2013, the Office of Management and Budget (OMB) issued Title 2 U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Uniform Guidance applies to state and local governments, institutions of higher education, and not-for-profit organizations for all federal awards (or funding increments to existing awards made) on or after December 26, 2014. However, due to the complexity and significance of the reform, the OMB established a grace period for the implementation of the Uniform Guidance procurement standards for three years from the effective date. As such, for most June 30 year-end tax periods, the procurement standards under Uniform Guidance would be applied to fiscal year 2019 (July 1, 2018, through June 30, 2019).

Five methods of Procurement
The new general requirements and five methods of procurement most closely follow the previous OMB Circular A-102, Grants and Cooperative Agreements with State and Local Governments. Detailed in the table below is a summary of the five methods:

Micro-purchase threshold
The micro-purchase threshold for procurement under the Uniform Guidance increased from $3,500 to $10,000 for fiscal year 2017 under Section 217(b) of the National Defense Authorization Act (NDAA). However, the raised threshold only applied to institutions of higher education, not-for-profit entities related to or affiliated with institutions of higher education, not-for-profit research organizations, and independent research institutes. For fiscal year 2018, the NDAA further increased the simplified acquisition threshold to $250,000 (previously $150,000) and the micro-purchase threshold to $10,000 (previously $3,500), respectively, for all auditees for all Federal grants.

In June 2018, OMB issued a memo which provided for an exception allowing organizations to utilize the higher threshold of $10,000 for micro-purchases and $250,000 for simplified acquisitions in advance of revisions to the FAR at 48 C.F.R. Subpart 2.1 and the Uniform Guidance.

Bottom line
Organizations should assess the impact of the Uniform Guidance procurement standards, specifically how it relates to internal controls, documented policies, thresholds, and staffing levels. Organizations that have early adopted previous thresholds should reassess the new guidance and thresholds, and where appropriate, update their internal policies accordingly.