Effective August 31, 2020, the micropurchase threshold and simplified acquisition threshold for procurement set by the Federal Acquisition Regulation (FAR) officially increases.
The micro-purchase threshold, used in the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), officially increases from $3,500 to $10,000; the simplified acquisition threshold—for the small purchase threshold—increases from $150,000 to $250,000.
While some federal agencies already made changes to the thresholds allowed for certain types of entities, the increased procurement thresholds in the FAR are applicable to all non-federal entities that carry out a federal award as a recipient or subrecipient, which encompass the following:
- Local governments
- Indian tribes
- Institutions of higher education
- Not-for-profit organizations
Previously, the National Defense Authorization Act (NDAA) raised the micro-purchase threshold from $3,500 to $10,000, which was applicable for institutions of higher education, as defined in Section 101(a) of the Higher Education Act of 1965, not-for-profit entities related to or affiliated with institutions of higher education, not-for-profit research organizations, and independent research institutes.
The amendments published on July 2, 2020, in the Federal Register are codified in the Federal Acquisition Regulations, which currently is referred to in setting the procurement thresholds under the Uniform Guidance.
The increased micro-purchase and small purchase thresholds could allow non-federal entities to reduce the administrative burden surrounding procurement procedures.
Organizations should keep in mind that Uniform Guidance requires organizations to document their procurement policies, and changes to procurement thresholds should also be documented.
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For questions regarding how the increased procurement thresholds might affect your organization, contact your Moss Adams professional.