Key Takeaways
- Procurement for federal awards requires documented procedures, cost analysis, conflict-of-interest standards and complete records to meet Uniform Guidance (UG) compliance.
- Federal grant recipients must verify suspension and debarment through System for Award Management (SAM.gov) and use the correct procurement method based on thresholds.
- Required contract clauses, domestic purchasing rules and thorough documentation reduce audit risk and support federal grant compliance with Uniform Guidance and Build America, Buy America Act (BABA).
Procurement is an important aspect of federal grants and it’s necessary for those entities receiving federal awards to comply with the requirements. Federal grant recipients and subrecipients must follow the procurement standards contained in 2 CFR 200.317-327. Scrutiny of federal grants is ever increasing and procurement is an important component of compliance.
Entities should note that there are slight differences in the 2024 Uniform Guidance (UG) revisions and that compliance requirements are slightly different for awards. For the most part, federal grants awarded on or after October 1, 2024 are subject to the 2024 UG revisions. This refresher will primarily focus on the 2024 Uniform Guidance as it relates to local governments.
Key Compliance Requirements
- Documented procurement procedures – the entity must have (and use) written procurement procedures which must be consistent with federal, state and local laws and regulations.
- Oversight of contractors – the entity must ensure that contractors perform in accordance with their contracts.
- Cost/price analysis – the entity must perform a cost or price analysis for every procurement transaction above the simplified acquisition threshold. These independent estimates must be made before receiving bids or proposals.
- Suspension and debarment – federal grant recipients are not allowed to contract with or make subawards to entities that are suspended or debarred for all goods or services that are expected to be $25,000 or more. The entity must verify that the contractor or subrecipient is not suspended or debarred which can be done by checking the System for Award Management (SAM.gov).
- Conflicts of interest – the entity must have written standards of conduct. This must cover conflicts of interest and specify the actions of employees as there can be no conflicts of interest in those participating in selecting, awarding and administering contracts.
- Procurement records – the entity must maintain records of each procurement transaction which must include the rationale for the procurement method, contractor selection or rejection and the basis for the contract price.
Common Procurement Mistakes |
| – Outdated procurement policies – Lack of cost/price analysis – Failure to verify (or document) suspension/debarment status |
Procurement Methods
Uniform Guidance contains three types of procurement methods.
- Informal procurement – may be used when the value of the transaction is below the simplified acquisition threshold (SAT).
a. Micro-purchases – can be awarded when the cumulative amount of the transaction is below the micro-purchase threshold ($15,000 as of October 1, 2025). They may be awarded without obtaining competitive quotes as long as the price is reasonable. Documentation must be maintained to support this conclusion.
b. Simplified acquisitions – price or rate quotations must be obtained from an adequate number of qualified sources. Generally, the entity can use its judgment to determine what is considered adequate. - Formal procurement – these are required when the value of the transaction is above the simplified acquisition threshold ($350,000 as of October 1, 2025). These methods are competitive and require public notice and solicitation from an adequate number of qualified sources.
- Noncompetitive procurement – this method may only be used in the following circumstances:
a. Aggregate amount of the transaction is below the micro-purchase threshold.
b. There is only one source available.
c. Public emergency does not permit a delay.
d. The federal agency or pass-through entity provides written approval to use a noncompetitive method.
e. There is inadequate competition after soliciting several sources.
The entity must document its reasoning for noncompetitive procurement and maintain supporting documentation.
Additionally, the entity may adopt a higher micro-purchase threshold (up to $50,000), if it self-certifies the higher amount each year. Documentation must include justification of the higher threshold, clear identification of the threshold amount and supporting documentation of any of the following:
The thresholds are set in the Federal Acquisition Regulation (FAR) at 48 CFR part 2, subpart 2.1. Note that the entity may establish procurement thresholds that are more restrictive than those prescribed in the CFR. In such cases, the entity must follow its own lower thresholds, provided they are consistent with applicable state and local procurement requirements.
Common Procurement Mistakes |
– Inadequate documentation of compliance |
Made in the USA
When practicable, preference should be made to purchase or use goods, products or materials produced in the United States (such as iron, steel, cement and other manufactured products). Additionally, for infrastructure projects obligated on or after May 14, 2022, the entity must comply with the Build America, Buy America Act (BABA) which requires that all the iron, steel, manufactured products and construction materials that are used in the project are produced/manufactured in the United States. When applicable, entities should consider building these preferences into solicitations and contracts and maintain documentation.
Required Contract Provisions
Another common procurement mistake is missing required contract clauses. Certain clauses must be included depending on contract size/type. These clauses include, but are not limited to, the following:
Contract Requirement | Applicable For |
Address administrative, contractual or legal remedies if contractors violate contract terms | Contracts over the simplified acquisition threshold |
Address termination for cause/convenience | Contracts over $10,000 |
Equal Employment Opportunity clause | All federally assisted construction contracts |
Davis-Bacon Act compliance – contractors must pay prevailing wages to laborers and mechanic and Copeland “Anti-Kickback” Act compliance. | All prime construction contracts over $2,000 |
Contract Work Hours and Safety Standards Act compliance – construction wages for mechanics and laborers must be computed based on a 40-hour work week. Work in excess of 40 hours per week must be compensated at least at time and a half rate. | All contracts over $100,000 involving employment of mechanics or laborers |
Clean Air Act compliance | All contracts and subgrants over $150,000 |
Debarment and suspension – a contract cannot be awarded to a party listed on the government-wide exclusions on SAM.gov | All contracts |
Byrd Anti-Lobbying Amendment – contractors that apply or bid must file the required certification | All contracts over $100,000 |
All required contract provisions can be found in Appendix II to Part 200 of the CFR.
Generally, procurement records must be retained for three years from the submission date of the grant’s final financial report.
Federal requirements change frequently, so it is important to stay up-to-date on the latest requirements. The Office of Management and Budget (OMB) proposed revisions in May 2026 to the Uniform Guidance, some of which will affect procurement, including clarifications on domestic preferences. The proposal is in the comment period until July 13th and a final rule is expected to be effective by October 1, 2026.
To stay in compliance,
- review Uniform Guidance and the FAR frequently
- review your policies and thresholds frequently
- utilize checklists and templates
- ensure procurement staff have appropriate training
Documentation Checklist |
Have you maintained:
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Closing
It’s important to remember that a common audit saying is “if it’s not documented, it’s not done” – the same goes for your procurement transactions. You cannot prove to your auditors or the federal government that a transaction was performed in accordance with the standards if there is no documentation.
Contact Us
If you have questions, please reach out to your PKF O’Connor Davies client service team or:
Katherine Patnaude, CPA
Partner
kpatnaude@pkfod.com | 860.419.3404