Tribal Financial Management Center

Micro-purchase is one type of procurement method used for the day-to-day items required to do routine activities and operations. This method is appropriate when the total cost is less than $10,000. Micro-purchases may be awarded without asking for competitive quotes when grantees consider the price to be reasonable. These types of purchases should be made equally from a variety of qualified vendors and contractors. It is important to be transparent about the total costs of purchases to avoid the appearance of trying to get around the dollar threshold. Price comparison is not required; however, the prices from different vendors should not be too far apart. An example of micro-purchasing toilet paper in bulk for a shelter facility is provided below. These are two methods which could be used for the procurement:

1. Toilet paper could be purchased from Store A, Store B, and Store C at the same time. The total of the purchases cannot exceed $10,000.
2. Toilet paper could be purchased all from Store A (for $10,000 or less). The next time bulk toilet paper is needed, the purchase would be made from Store B. The third time a bulk toilet paper purchases is needed, the purchase would be made at Store C. The time between purchases should be long enough that an independent reviewer would have no doubt all the toilet paper was used in between purchases.

Small purchases are those with a cost less than $250,000. This is the current (2019) amount below which a grantee may purchase goods, services, and property using simplified purchasing methods. The dollar amount is adjusted from time-to-time. It is a good idea to check the current “simplified acquisition threshold" at 2 CFR 200 guidelines. A grantee may also set its own dollar threshold for small purchases below the federal level. For example, a grantee’s procurement policy might set the small purchase limit to costs less than $75,000. The procurement policy would set the guidelines for the number and type of price or rate quotation required before making the purchasing decision. For example, a grantee’s policy might require three or more telephone or online bids to support the best purchase decision.

Competitive bid methods are used when the purchases are greater than $250,000 (or the current Simplified Acquisition Threshold). There are two types of competitive bids.

• Open Competition – This is the preferred method when qualifications are important. The bidders submit proposals in response to a request made by the purchaser. The payment method is cost reimbursement for time and materials or a fixed price of a fair and reasonable compensation. The award is made to the bidder which results in the best purchase decision based on price and qualifications.
• Sealed Bids – For this method, public advertising is used to solicit a reasonable number of suppliers who meet the minimum specified qualifications. The payment method is a fixed-price contract. The award is made to the lowest bid submitted in writing.

The procurement specifications should be made so unreasonable requirements are not placed on bidder, such as:

• Unnecessary experience
• Excessive bonding
• Demanding name brands only instead of comparable brands
• Non-relevant geographic preferences

A sole source award is usually only allowable when it is pre-authorized by the federal funding agency. The non-competitive (Sole Source Award) method is not common. It is used when:

• Specialty goods or services are only available through one source
• An open competition is held and the response is deemed inadequate
• An emergency situation prohibits a competition