The Impact of the Proposed Changes to the FAR Procurement Thresholds
Remember all the hoopla in the summer of 2018 when the Office of Management and Budget issued OMB Memorandum M-18-18. If not, here’s a brief recap.
M-18-18 provided guidance to federal awarding agencies related to raising the threshold for micro-purchases under federal financial assistance awards from $3,500 to $10,000, and increased the threshold for simplified acquisitions from $100,000 to $250,000 for all recipients. The guidance was necessitated to implement statutory changes under the National Defense Authorization Act (NDAA) of 2017 (Pub. L. 114-328) and the NDAA of 2018 (Pub. L. 115-91). The guidance allowed recipients to seek federal agency approval to raise the micro-purchase threshold and the simplified acquisition threshold under their award. It also implemented an approval process for certain institutions of higher education that want to request micro-purchase thresholds higher than $10,000. Recipients of existing federal financial assistance awards were allowed to immediately revise their internal procurement policies to implement the new thresholds as long as they had sufficient documentation to show appropriate internal controls. The memo also provided directions for auditors conducting single audits as to how to review auditee procurement thresholds during their engagements.
With all this fanfare, a couple of things were missing. The thresholds had not been officially changed in the Federal Acquisition Regulation (FAR) for federal procurement contracts, nor the OMB uniform guidance for financial assistance awards. Well, it seems as if we’ve finally reached the next step in the process.
In today’s Federal Register, the Government Services Administration, Department of Defense and the National Aeronautics and Space Administration, proposed to amend the FAR to increase the micro-purchase threshold to $10,000 and the simplified acquisition threshold to $250,000, while also clarifying certain procurement terms. The agencies are asking stakeholders to comment on the proposed rule by Dec. 2. While the specific micro-purchase and simplified acquisition dollar amounts currently are mentioned throughout the FAR, the agencies are proposing to identify the new thresholds in the definition, while removing the dollar amounts in other sections of the FAR and simply using the term “micro-purchase threshold” and “simplified acquisition threshold” in other sections of the FAR.
Although the uniform guidance isn’t specifically mentioned in the proposed rule, one can only expect that when this proposed rule goes final and the FAR thresholds are officially changed, the uniform guidance thresholds at 2 C.F.R Parts 200.67 and 200.88 will change accordingly. OMB has mentioned that it planned to issue proposed updates to the uniform guidance this fall as part of its required five-year review of the document. It will be interesting to see how the timing of all this shakes out as far as when these updates to the uniform guidance will go final.
Join us for our following Federal Grants Forum:
Federal Grants Forum: Dallas, TX | October 16 – 18, 2019
Learn more at http://grants.thompson.com/conferences.aspx.
