The New Year is off to a better start than originally thought for institutions of higher education and nonprofit research organizations.  Under the National Defense Authorization Act (NDAA) for Fiscal Year 2017 [S. 2943] signed by President Obama on December 23rd, the micro-purchase threshold for procurement under the Uniform Guidance was increased from $3,500 to at least $10,000.

The NDAA limits this increase to only the following types of organizations:

  • Institutions of Higher Education (IHE), as defined in section 101(a) of the Higher Education Act of 1965
  • Related or affiliated nonprofit entities of IHE’s
  • Nonprofit research organizations
  • Independent research institutes

For these organizations, this increase in the micro-purchase threshold should reduce administrative burden, and is just in time, as the procurement grace period under the Uniform Guidance is set to expire January 1, 2017 beginning with calendar year-end organizations.  For organizations not included in the list above, the micro-purchase threshold will remain at $3,500 or until routinely updated in the Federal Acquisition Regulations.

The Office of Management and Budget (OMB) is in the process of analyzing the NDAA in order to integrate the changes into the Uniform Guidance at 2 Code of Federal Regulations (CFR) Part 200.  No timeline has been given by the OMB for its updates to the Uniform Guidance.  It is also not known what clarifications OMB may provide related to the language contained in the NDAA, as questions do already exist on terminology included in the NDAA provision.

The update to the micro-purchase threshold for IHE’s and nonprofit research organizations has been an ongoing effort of their respective industry associations for some time.  The changes are seen as positive steps forward in ensuring the requirements of the Uniform Guidance align with the goal of having requirements that reduce the risk of fraud, waste and abuse while also easing administrative burdens.

 

© 2017 Clark Nuber PS All Rights Reserved

This article contains general information only and should not be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services. Before making any decision or taking any action, you should engage a qualified professional advisor.