Filed under: Federal Grant & Contract Consulting

Update: The OMB has recently issued Memo M-18-18 to provide more guidance on both the NDAA of 2017 and the NDAA of 2018. Read our updated article here.

Typically, the annual release of the Office of Management and Budget’s (OMB) Compliance Supplement is something that excites only auditors. However, this year’s edition offers guidance that auditees (grantees) are also likely to find valuable—additional information on changes to the Uniform Guidance’s micro-purchase threshold.

The changes presented in the 2018 OMB Guidance Supplement are best evaluated by type of entity, as revisions to laws over the past several years have been targeted towards certain types of organizations:

  1. Institutions of higher education, nonprofit research organizations, and independent research institutes
  2. All other entities except for States

We’ll cover what each of these entities can expect to find in the 2018 OMB Compliance Supplement.

Institutions of Higher Education, Nonprofit Research Organizations, and Independent Research Institutes

For these entity types, the National Defense Authorization Act (NDAA) of 2017, Section 217 (Pub. L. No. 114-328, 130 Stat. 6 (2051)) and 41 USC 1902(a)(2) contained the following provisions.

  • Raise the micro-purchase threshold to $10,000 for procurements under grants and cooperative agreements to institutions of higher education, or related or affiliated nonprofit entities, nonprofit research organizations, or independent research institutes.
  • Allow a threshold higher than $10,000 as determined appropriate by the head of the relevant executive agency.

When the NDAA of 2017 was signed into law, there were uncertainties related to its phrasing, most importantly, the question of whether the OMB needed to issue implementation guidance first before those select entities could make changes to the micro-purchase threshold in their procurement policies. The 2018 OMB Compliance Supplement has now (officially) provided perspective on this conundrum.

The 2018 OMB Compliance Supplement, Part 3.2-I states that implementation guidance still needs to be issued by the OMB to clarify the applicability date and other details contained in the NDAA of 2017. However, the 2018 OMB Compliance goes on to say:

  • For these entity types which had established micro-purchase thresholds up to the $10,000 prior to the enactment of the NDAA 2017, they will be allowed to continue the use of the same threshold as documented in their internal procurement policies.
  • For these entity types who went ahead and increased their micro-purchase threshold upon the NDAA 2017 being signed into law, auditors are not expected to develop audit findings for covered entities that implemented increased micro-purchase threshold provisions after December 23, 2016, as long as the entity documented the decision in their internal procurement policies.

All Other Entities Except for States

For all other entities except states, the NDAA of 2018 increases the simplified acquisition threshold to $250,000 and the micro-purchase threshold to $10,000 for ALL auditees. These changes will effectively redefine the simplified acquisition and micro-purchase thresholds noted in the Uniform Guidance and will become effective when they are formally codified in the Federal Acquisition Regulations at 48 CFR Subpart 2.1. The OMB is specific in mentioning that the changes in the NDAA of 2018 cannot be adopted early, so all must wait for now. However, for those entities that have been challenged by the new procurement thresholds, the wait will be well worth it.

The 2018 OMB Compliance Supplement was one step closer to bringing this specific Uniform Guidance procurement matter to rest. Many entities are still challenged with updating and implementing changes to existing procurement policy and procedures to comply with the Uniform Guidance. For some, these changes to the purchase thresholds will be a welcome change, once all necessary steps are taken by the OMB.

Please click here for our previous article on the Uniform Guidance Procurement changes.

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