Domain: Fiscal Management
Procurement standards live in 2 CFR 200 Subpart D, sections 200.317 through 200.327, and they govern how an organization spending federal grant funds buys goods and services, everything from office supplies to a major construction contract. This course files procurement under the Fiscal Management domain because getting it wrong is one of the most common and most expensive audit findings a grants manager will encounter: an undocumented sole-source contract or a conflict of interest that was never disclosed can put an entire award's costs in question.
2 CFR 200.320 describes three types of procurement methods: informal (micro-purchases and simplified acquisitions), formal (sealed bids or proposals), and noncompetitive. The informal and formal methods run from light to heavy as the dollar amount rises. Micro-purchases, the smallest tier, can be made without soliciting competitive quotes if the organization considers the price reasonable based on research, experience, or purchase history and keeps documents that support that conclusion; where practical, they should be distributed equitably among qualified suppliers. Above the micro-purchase threshold but not above the simplified acquisition threshold, simplified acquisition procedures apply, requiring price or rate quotations from an adequate number of qualified sources, informal but still competitive. Above the simplified acquisition threshold, procurement becomes formal, competitive, and public: either sealed bids (a firm fixed-price contract awarded to the lowest responsive and responsible bidder, feasible when a complete, adequate, and realistic specification exists and two or more responsible bidders can compete, and preferred for construction services) or proposals (used when sealed bids are not appropriate, allowing either a fixed-price or a cost-reimbursement contract, with award to the responsible offeror whose proposal is most advantageous considering price and other factors, not necessarily the cheapest).
The micro-purchase threshold and simplified acquisition threshold follow the Federal Acquisition Regulation (FAR) and are periodically raised. Effective October 1, 2025, the FAR's micro-purchase threshold is $15,000 (up from a prior $10,000) and its simplified acquisition threshold is $350,000 (up from a prior $250,000). The FAR sets lower micro-purchase amounts for some work, such as $2,000 for construction subject to Davis-Bacon wage rates and $2,500 for services subject to Service Contract Labor Standards, so check how the award's terms apply them. An organization may set lower thresholds of its own. It may also self-certify a micro-purchase threshold above the FAR amount, up to $50,000 annually, if it documents the higher threshold and supports it with a low-risk auditee qualification, an annual internal institutional risk assessment, or (for a public institution) consistency with State law; going above $50,000 requires approval from the cognizant agency for indirect costs. These thresholds move over time, so a grants manager should confirm the current figures rather than relying on a number memorized from an earlier year.
Noncompetitive procurement, buying from one source without soliciting competing bids or proposals, is allowed only in specific circumstances, not as a matter of convenience. 2 CFR 200.320(c) permits it when the amount does not exceed the micro-purchase threshold, when the transaction can only be fulfilled by a single source, when a public exigency or emergency will not permit the delay of public notice of a competitive solicitation, when the organization requests it in writing and the federal agency or pass-through entity gives written approval, or when, after soliciting several sources, competition is determined inadequate. Each of these is a documented exception, not a default; a grants manager who wants to sole-source a contract above the micro-purchase threshold needs to be able to point to one of these specific conditions and document why it applies.
2 CFR 200.318(c) requires every organization to maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts. No employee, officer, agent, or board member with a real or apparent conflict of interest may take part in the selection, award, or administration of a contract supported by the federal award. A conflict includes the person, an immediate family member, a partner, or an organization that employs or is about to employ any of them having a financial or other interest in, or a tangible personal benefit from, an entity considered for the contract. They also may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors, although the organization may set standards for interests that are not substantial or for unsolicited items of nominal value, and its standards must provide for disciplinary actions for violations. An organization with a parent, affiliate, or subsidiary that is not a government also needs written standards on organizational conflicts of interest. This is a written-policy requirement, not just good intentions: an organization needs an actual document that a monitor or auditor can review.
Once a procurement is complete and a contract is awarded, 2 CFR 200.327 requires the contract to contain the applicable provisions described in Appendix II, depending on its dollar value and type. Examples include administrative, contractual, or legal remedies for breach in contracts above the simplified acquisition threshold; termination for cause and for convenience in contracts over $10,000; the equal opportunity clause in federally assisted construction contracts; Davis-Bacon Act compliance in prime construction contracts over $2,000 when program legislation requires it; and Contract Work Hours and Safety Standards Act compliance in contracts over $100,000 that involve mechanics or laborers. Appendix II also covers other clauses, such as debarment and suspension. A contract missing the required provisions is a procurement compliance gap even if the underlying purchase itself was properly competed.
1. Which sections of 2 CFR 200 contain the procurement standards?
2. As of October 1, 2025, what is the micro-purchase threshold?
3. As of October 1, 2025, what is the simplified acquisition threshold (SAT)?
4. Which procurement method is used when a complete specification exists and at least two responsible bidders can compete, with award to the lowest responsive and responsible bidder?
5. In competitive proposals, is the award required to go to the lowest-priced offeror?
6. Which of the following is NOT one of the allowed conditions for noncompetitive (sole source) procurement under 200.320?
7. Which section of 2 CFR 200 requires written standards of conduct covering conflicts of interest in procurement?
8. Under 200.318, whose financial interest in a bidding firm would create a prohibited conflict?
9. Can an organization's procurement standards of conduct ever allow accepting anything of value from a contractor?
10. Which section of 2 CFR 200 requires certain provisions, like termination clauses and remedies for breach, to appear in the contract resulting from a procurement, as described in Appendix II?
11. A GCHS staff member wants to sole-source a $200,000 contract to a firm owned by their spouse, above the micro-purchase threshold and with no emergency or single-source justification. Is this permitted?
12. Can an organization self-certify a micro-purchase threshold higher than the base federal threshold?
13. Why is procurement considered a common and expensive source of audit findings?
14. Under 200.320, is a "small purchase procedure" formal or informal, and what does it require?