TLDR
For 2026, 2 CFR 200 procurement thresholds point to FAR ceilings: $15,000 for the general micro-purchase threshold and $350,000 for the simplified acquisition threshold. Written procurement policies still need to state the organization's controlling thresholds because state rules, pass-through terms, award conditions, and internal controls can require lower limits.
2 CFR 200 Subpart D: Federal Procurement Standards
Federal procurement rules exist to ensure that federal award funds are spent competitively and transparently. For nonprofits, they impose requirements that go well beyond internal purchasing preferences: written policies, competition at defined dollar thresholds, conflict-of-interest disclosures, and responsibility checks before covered purchases.
The 2025 FAR threshold update changed the dollar ceilings that 2 CFR 200 points to for federal-award procurement. Organizations that have not reviewed their procurement policies since 2024 may now be operating from stale figures, and policies should also show when a lower state, pass-through, award, or internal threshold controls.
The Five Procurement Methods
Subpart D defines five distinct procurement methods, each with different competition requirements:
| Method | Threshold | Competition required |
|---|---|---|
| Micro-purchase | Up to $15,000 generally | No quotes if price is reasonable; distribute equitably |
| Small purchase | $15,001-$350,000 | Price/rate quotations from adequate number of sources |
| Sealed bids | Over $350,000 when suitable | Public advertising; award to lowest responsive bidder |
| Competitive proposals | Over $350,000 when suitable | Published criteria; selection based on merit |
| Noncompetitive (sole source) | Any amount | Written justification; one of four conditions required |
The thresholds establish minimum requirements. An organization may always use a more rigorous competition method for a lower-dollar purchase - but cannot use a less rigorous method for a higher-dollar purchase.
The Written Procurement Policy Requirement
2 CFR 200.318 requires that procurement policies be in writing. The written policy must address:
- Standards of conduct and conflicts of interest
- Procedures for each of the five procurement methods
- Contract type selection criteria
- Contractor responsibility assessment
- Debarment and suspension checking procedures
- Record-keeping requirements
An undocumented procurement process - even a competitively sound one - is a Subpart D finding because the regulation requires written standards, not just good practices. Organizations that conduct competitive procurement informally without a supporting written policy are at risk regardless of the actual purchasing outcomes.
Sole-Source Procurement: When It’s Justified
Noncompetitive procurement is not prohibited - it is allowed in four specific circumstances:
- Unique source: The item is only available from a single source (a patent-protected technology, a proprietary software system, a sole-licensed provider)
- Public emergency: The urgency does not permit competitive solicitation
- Federal authorization: The awarding agency has specifically authorized noncompetitive procurement
- Inadequate competition: Full competition was pursued but resulted in only one responsive bid
The written justification must identify which of the four conditions applies and must be retained in the procurement file. “We’ve always used this vendor” and “they have the best service” do not satisfy any of the four conditions.
Conflict of Interest Controls
Conflicts of interest in procurement - an employee awarding a contract to a family member, a board member steering business to a company they own - are addressed under 2 CFR 200.318(c). The written policy must:
- Prohibit employees, officers, and agents from participating in selections where conflicts exist
- Define what constitutes a conflict (real and apparent)
- Require disclosure of potential conflicts
Federal awarding agencies expect nonprofits to enforce these provisions proactively. Discovery of an undisclosed conflict during an audit - even if the procurement itself was priced fairly - typically results in disallowance and potential fraud referral.
How GrantPipe Helps
GrantPipe’s grant management module captures vendor information at the transaction level, making it straightforward to run procurement reports by vendor and award. When a purchase is recorded, the procurement method, competition documentation status, and debarment check date can be attached as supporting documentation. Grant managers see a complete procurement history per award - the format auditors need to verify Subpart D compliance without requesting files from multiple staff members or locations.
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Source: HHS Office of Inspector General, Audit Findings Database, 2023
- Simplified acquisition threshold
- The dollar amount below which simplified procurement procedures may apply. The 2026 FAR ceiling is $350,000, and 2 CFR 200.1 requires each recipient or subrecipient to set its documented threshold at or below the FAR amount.
DEFINITION
- Micro-purchase
- A purchase not exceeding the controlling micro-purchase threshold. The general 2026 FAR ceiling is $15,000, but written policy, award terms, pass-through requirements, or special FAR exceptions can require a lower amount.
DEFINITION
- Noncompetitive procurement
- Also called sole-source procurement. Permitted only when one of four specific conditions applies and must be fully documented with written justification retained in the procurement file.
DEFINITION
- Conflict of interest
- Under 2 CFR 200.318, no employee, officer, or agent may participate in the selection, award, or administration of a contract if a real or apparent conflict of interest exists. The written procurement policy must address conflicts of interest and require disclosure.
DEFINITION
- Debarment
- Exclusion of a person or entity from federal financial assistance, typically following a serious violation of federal regulations. Debarred entities appear on the SAM.gov exclusions list and cannot receive federally-funded awards.
DEFINITION
Q&A
What documentation must be kept for each procurement?
2 CFR 200.318(i) requires maintaining records sufficient to detail the history of each procurement, including: the rationale for the procurement method, selection of the contract type, contractor selection or rejection and the basis for it, and the basis for the contract price. For sole-source, this includes the written justification. Documentation must be retained for at least 3 years after final payment.
Q&A
How does the equitable distribution requirement for micro-purchases work?
Even though micro-purchases do not require competitive quotes when the price is reasonable, the regulation requires them to be distributed equitably among qualified suppliers when practicable. In practice, this means not always purchasing from the same vendor for every micro-purchase - organizations should rotate among qualified vendors and document the rotation practice in their procurement policy.
Q&A
What is required when using a cooperative purchasing agreement?
Cooperative purchasing agreements (piggybacking on another entity's contract) are permitted if the original contract was awarded through a competitive process consistent with Subpart D, and the original solicitation contemplated cooperative purchasing. The organization must verify the original contract was properly competed and document this review. Pre-existing government cooperative contracts (such as state master contracts or GSA schedules) generally satisfy this requirement.
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