The Office of Management and Budget (OMB) recently updated their policy regarding the micro-purchases and simplified acquisition thresholds. The micro-purchases threshold has been raised to $10,000. This change is not yet codified in the Federal Acquisition Regulations (FAR), but the OMB issued a memo dated June 20, 2018, allowing for an exception so the $10,000 can be used before codification.
Additionally, the simplified acquisition threshold was increased to $250,000; however, almost all state and local entities have a required bid threshold below this amount already. This second change should not significantly impact most entities.
What does this mean for you?
If your micro-purchases threshold to get quotes was originally greater than the previous threshold of $3,500, you can now use that original threshold as long as it is equal to or below $10,000. In many cases, entities had a smaller threshold than $10,000 to get quotes. You are not required to increase your threshold to $10,000.
For example, if you required quotes on purchases over $5,000, you can now use the $5,000 again for federal purchases.
What steps should we take?
We recommend taking the following steps:
- Verify with your federal cognizant oversight contact that they agree with this memo.
- Document in writing that the entity is electing to use the exemption provided in the June 20, 2018, OMB memorandum #M-18-18 to use up to $10,000 as the micro-purchases threshold for federal expenditures.
- Document what your threshold is for getting quotes.
This will allow the auditor to only look at transactions at the threshold you set to get quotes (again noting that it cannot exceed $10,000).
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Information in this document has been obtained by Allen, Gibbs & Houlik, L.C. from sources believed to be reliable. However, AGH does not guarantee the accuracy nor completeness of any information. This communication does not and is not intended to provide legal, accounting or other professional advice or opinions on specific facts or matters, and accordingly, AGH assumes no liability whatsoever in connection with its use. Nothing in this communication can be used to avoid penalties that may be imposed by a governmental taxing authority or agency.
Senior Vice President
Government, Not-For-Profit Industry Team Leader
Mike Lowry specializes in governmental and not-for-profit clients, leading the firm's industry team for these areas. Prior to joining AGH, Mike’s experience included nearly 20 years of financial and technology leadership positions in hospitality management and software companies.
Mike is a certified public accountant who has earned the designation of Certified Government Financial Manager from the Association of Government Accountants, and he is also a member of the American Institute of Certified Public Accountants, the Kansas Society of Certified Public Accountants, and the Association of Government Accountants. He is a frequent presenter and member of the Kansas, Missouri and Great Plains Financial Officers Association, and serves as a Annual Report reviewer for the GFOA.