OMB Increases Procurement Thresholds – Rea CPA

OMB Increases Procurement Thresholds

Federal Grant Recipients May Need To Update Their Procurement Rules

Procurement Thresholds | Federal Grant Recipients | Ohio CPA Firm
To avoid findings and questioned costs in your next audit, you must be sure that your entity adheres to the methods outlined in the uniform guidance for all federal funds. As always, it’s imperative to maintain documentation of the procurement method used and how your vendors were selected, which includes keeping documentation of any quotes received and any proposal score sheets. These are the items auditors and federal reviewers expect you to be able to produce at a moment’s notice. Read on to learn more.

On June 20, 2018, the White House Office of Management and Budget (OMB) raised the thresholds for procurement – micro-purchases and simplified acquisitions. Specifically, OMB Memorandum M-18-18, entitled “Implementing Statutory Changes to the Micro-Purchase and the Simplified Acquisition Thresholds for Financial Assistance,” implements the statutory changes that were set forth in the National Defense Authorization Acts for fiscal years 2017 and 2018. These changes are effective immediately.

Changes Revealed

The OMB increased the micro-purchase threshold from $3,500 to $10,000. The simplified acquisition threshold was increased from $150,000 to $250,000 for all recipients. The OMB also granted an exception that allows recipients to use the higher thresholds in advance of additional revisions to the Federal Acquisition Regulation (FAR) per the Code of Federal Regulations (CFR) – Title 48, subpart 2.1 and Uniform Guidance. To take advantage of these increased thresholds, entities are encouraged to evaluate and update their current procurement policies and procedures.

While this exception will take effect immediately, your non-federal entity can always choose to use lower thresholds than required by the uniform guidance. For example, if your entity is comfortable with the previous micro-purchase and simplified acquisition thresholds, you are not required to raise them to the new levels, but that option remains available to you.

Uniform guidance compliance requirements govern all grant awards and incremental funding increases that occurred after Dec. 26, 2014, with the exception of the procurement requirements. The OMB allowed for two extensions for the implementation of the procurement requirements for a total of three fiscal years after that effective date. For entities with a Dec. 31 fiscal year-end, the requirements took effect Jan. 1, 2018. The effective date for entities with June 30 year-ends was July 1, 2018.

Find out the Five methods for procurement success!

To avoid findings and questioned costs in your next audit, you must be sure that your entity adheres to the methods outlined in the uniform guidance for all federal funds. As always, it’s imperative to maintain documentation of the procurement method used and how your vendors were selected, which includes keeping documentation of any quotes received and any proposal score sheets. These are the items auditors and federal reviewers expect you to be able to produce at a moment’s notice.

Do your procurement methods comply with new guidance? To avoid any issues moving forward, contact Rea & Associate’s government services team or call Chad Gorfido at 330.722.8222 for assistance.

By Chad Gorfido, CPA (Cleveland office)

Chad Gorfido has earned the AICPA Advanced Single Audit Certificate from the AICPA’s Governmental Audit Quality Center. This certification speaks to Chad’s ability to plan, direct and report on single audits in compliance with Uniform Guidance.

To learn more about Uniform Guidance or for tips to manage your entity’s policies and procedures, check out these articles:

Are Your Policies & Procedures Out Of Date?

 Uniform Grant Guidance: What all government entities need to know

OMB Gives Non-federal entities one last chance to comply with new procurement guidelines