TLDR
The simplified acquisition threshold sits at $250,000 following the 2024 Uniform Guidance revision. Organizations whose written policies still reference older figures need to update — and the update affects not just documentation requirements but how competition must be conducted.
Federal Procurement Thresholds: Micro, Small, and Large Purchase Rules
The Uniform Guidance structures federal procurement requirements around dollar thresholds. Each tier has different competition requirements, documentation standards, and audit exposure. The thresholds are not suggestions — they define minimum compliance requirements for every purchase charged to a federal award.
The 2024 Uniform Guidance revision updated and clarified several provisions. Organizations operating under written policies last updated before 2024 should review current threshold figures against what their policies state.
Current Threshold Summary
| Threshold | Dollar limit | Method name |
|---|---|---|
| Micro-purchase | ≤ $10,000 | Micro-purchase procedure |
| Simplified acquisition | $10,001–$250,000 | Small purchase procedure |
| Formal competition (services) | > $250,000 | Competitive proposals |
| Formal competition (construction/supplies) | > $250,000 | Sealed bidding |
| Sole source | Any amount | Noncompetitive procurement |
These thresholds apply to the aggregate value of the purchase requirement, not individual transaction amounts. Splitting a $50,000 requirement into six separate purchases to stay under the $10,000 micro-purchase threshold violates the anti-fragmentation rule.
Micro-Purchase ($10,000 and Under): Minimal Documentation, Real Requirements
Micro-purchases require no competitive solicitation. Management simply determines that the price is reasonable and makes the purchase. But two requirements remain:
Price reasonableness: The purchase price must be considered reasonable. In practice, this means comparing the price to market rates, published catalogs, or recent prior purchases for the same item. Document how you concluded the price was reasonable.
Equitable distribution: Purchases must be distributed equitably among qualified suppliers. If your organization buys office supplies exclusively from one vendor through 50 micro-purchases per year, that pattern may trigger questions about whether competition is being bypassed. Document the supplier rotation.
Small Purchase ($10,001–$250,000): Informal Competition
Small purchases require “price or rate quotations from an adequate number of qualified sources.” The regulation does not specify a minimum number of quotes; auditors and federal agencies generally expect at least two to three.
Documentation requirements:
- Contact information for each vendor solicited
- Written or emailed quotations received (or documented oral quotes)
- Record of which vendor was selected and why
- Any conflicts-of-interest disclosures
Failing to obtain multiple quotes — or obtaining them but not documenting them — is the most common procurement finding in small-dollar purchases. The documentation burden is low; the risk of not documenting is high.
Over $250,000: Formal Competition
Purchases exceeding $250,000 require formal competition. The method depends on the contract type:
Sealed bidding is used when: contract requirements are clearly defined, price is the primary selection criterion, and award will go to the lowest responsive responsible bidder. Required for most construction and commodity purchases above the threshold.
Competitive proposals are used for professional services, consulting, IT development, and other contracts where technical qualifications, approach, and price are all evaluation factors. A written request for proposals with published evaluation criteria must precede selection.
Both methods require: public advertisement, adequate response time, documentation of all responses, and a written selection justification.
The Anti-Fragmentation Rule
2 CFR 200.323 prohibits splitting requirements into smaller pieces to circumvent threshold competition requirements. The rule applies to requirements that are “naturally part of a single project, program, or work effort.”
If a construction project has a $600,000 total budget and an organization sequences it as six separate $100,000 contracts, that fragmentation violates the rule. Each separate award should be evaluated in the context of the overall project scope.
How GrantPipe Helps
GrantPipe logs vendor and purchase data at the transaction level, making it possible to run procurement reports sorted by award and vendor. When compliance testing requires auditors to verify that small purchases were competed appropriately, the system provides a transaction history that shows vendor diversity, purchase amounts, and documentation status — reducing the back-and-forth that makes procurement testing time-consuming for both organizations and auditors.
Free resource
Get the Nonprofit Grant Compliance Checklist
A practical checklist for post-award grant compliance: restricted funds, reporting cadence, audit prep, and common failure points. Delivered by email.
Source: 2 CFR Part 200, Section 200.346
- Micro-purchase threshold
- The dollar amount below which purchases may be made without competitive solicitation. Currently $10,000 for most nonprofit federal award recipients. Purchases must still be distributed equitably among suppliers.
DEFINITION
- Simplified acquisition threshold
- The dollar amount below which simplified (informal) competition procedures apply — $250,000. Purchases between $10,001 and $250,000 require price or rate quotations but not formal sealed bidding.
DEFINITION
- Sealed bidding
- A formal procurement method required for purchases above $250,000 when price is the primary selection criterion. Requires public advertising, formal bid documents, public bid opening, and award to the lowest responsive and responsible bidder.
DEFINITION
- Competitive proposals
- A formal procurement method for services above $250,000 where technical merit, qualifications, and price are all evaluation factors. Requires written evaluation criteria published before solicitation and documented scoring of each proposal.
DEFINITION
- Anti-fragmentation
- The prohibition under 2 CFR 200.323 on splitting purchases into smaller pieces to avoid threshold requirements. The aggregate value of requirements must be considered when selecting the applicable procurement method.
DEFINITION
Q&A
What documentation is required at each threshold level?
Micro-purchase: document that the price is reasonable (comparison to market or prior purchase history) and record of equitable distribution. Small purchase: written price or rate quotations from at least two to three sources, documentation of which was selected and why. Sealed bids: complete bid file including advertisement, addenda, all bids received, bid tabulation, and award justification. Competitive proposals: written solicitation, evaluation criteria, proposals received, scoring documentation, and selection justification.
Q&A
Can a nonprofit use cooperative purchasing agreements to avoid threshold competition?
Cooperative purchasing (piggybacking) is allowed if the original contract was competed in a manner consistent with Subpart D and the original solicitation contemplated cooperative purchasing. GSA schedules and state master contracts generally satisfy this requirement. The nonprofit must document its review of the original competition and confirm piggybacking is authorized under the original contract terms.
Q&A
What happens if a purchase exceeds a threshold and proper competition wasn't conducted?
The cost may be questioned and potentially disallowed. If the purchase was charged to a federal award, the federal agency may require repayment from non-federal sources. Repeated threshold violations without competition are treated as systemic findings — the entire procurement area may be subject to additional audit testing.
Frequently asked