Skip Navigation or Skip to Content

Revised Procurement Standards under the Uniform Guidance

On December 26, 2013, the Federal Office of Management and Budget (OMB) issued the Super Circular in the form of final regulations titled Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance, or UG), which superseded many of the circulars with which most nonprofits are familiar, such as OMB A-133. The Uniform Guidance became effective for all new federal awards and incremental funding on existing awards after December 26, 2014. For most nonprofit organizations, the fiscal year ending June 30, 2016 would be the first full fiscal year the Uniform Guidance would be effective.

One section of the Uniform Guidance that nonprofits may find more restrictive than prior OMB circulars is the Procurement Standards. The new guidance on procurement has much more defined requirements than in prior guidance, and, because of this, there is a grace period to implement the new Uniform Guidance. Nonprofits have the option of deferring the implementation and following the old OMB circulars for one year, but must document the election.

In summary, the Procurement Standards requires nonprofits to:

  • Document procurement procedures, which should include steps to address the different Methods of Procurement as detailed in the Uniform Guidance.
  • Maintain a written policy regarding conflict of interest that addresses how employees with conflicts should be excluded from the procurement process.
  • Maintain records sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.
  • Procurement transactions must be conducted in a manner that provides for full and open competition, unless it qualifies for a non-competitive proposal process.
  • Perform cost or price analysis for all transactions that exceed the Simplified Acquisition Threshold ($150,000). Details of the analysis may vary depending on the transaction, but a minimum estimated cost should be documented prior to receiving bids or proposals.

The Procurement Standards requires nonprofits to use one of the following Methods of Procurement:

  • Micro purchases – Purchases of supplies and services where the aggregate dollar amount does not exceed $3,000. No competitive quotes are required if management determines the price to be fair and the purchases are distributed among qualified suppliers.
  • Small purchases – Purchase of supplies and services that do not cost more than the Simplified Acquisition Threshold ($150,000). Informal purchasing procedures are acceptable, but price or rate quotes must be obtained from an adequate number of sources.
  • Sealed bids – Purchase of supplies and services in excess of the Simplified Acquisition Threshold. Under this purchase method, formal solicitation is required, and the fixed price is awarded to the responsible bidder who conformed to all material terms and is the lowest in price. This method is the most common procurement method for construction contracts.
  • Competitive proposals – Purchase of supplies and services in excess of the Simplified Acquisition Threshold where sealed bids are not appropriate. This procurement method requires formal solicitation where a fixed-price or cost-reimbursement contract is awarded. This also requires documentation on how the proposals were evaluated and ultimately selected.
  • Noncompetitive proposal – Also known as sole-source procurement, this may be appropriate if certain conditions are met. Examples of some conditions include when an item is available only from one source, when a public emergency does not allow for the time of the competitive proposal process, when the federal awarding agency authorizes, or the competition is deemed inadequate after a number of attempts at a competitive process.

The first step for nonprofits trying to implement the new Procurement Standards should be to review their own written policies. If the policies haven’t been reviewed in a long period of time, there is a good chance they are not in compliance with the new standards. Here are some key factors to consider during the review and, if necessary, revise:

  • Ensure the policy, at a minimum, includes the Methods of Procurement prescribed in the new standards. This will most likely be the most significant change to the procurement process, as organizations will need to establish controls and develop methods to document their process for each method.
  • Ensure the policy addresses conflict of interest to specify what constitutes a conflict of interest and how employees with conflicts are precluded from the procurement process.
  • For small purchases, the standards call for obtaining an adequate number of quotes, but organizations should address what they consider an adequate number of quotes.
  • Consider developing a management committee dedicated to the evaluation and selection process of sealed bids and competitive proposals. Standardized templates could be utilized to allow for consistent evaluation among the committee members.
  • Summaries of the evaluations and rationale for the final selections on sealed bids and competitive bids should be prepared and presented to the board of directors for final approval.
  • Develop standardized templates to help with cost/price analysis to ensure each procurement is consistently evaluated.
  • Establish a document retention policy to ensure each step of the procurement process is documented and retained for the auditors during their compliance testing.
  • Hold training sessions with employees responsible for procurement to ensure they understand the new standards.
  • Develop a checklist to help management ensure each step of the procurement process has been completed before making a selection.

The guidance in the new Procurement Standards are the minimums that an organization needs to have in order to be in compliance. However, an organization can include additional restrictive steps as it deems necessary.

For questions or more information, please contact Tom Huey at, Kelly Buck at, or call toll free at 844.4WINDES (844.494.6337).
Payments OnlineTaxCaddy
Secure File TransferWindes Portal