Changes in Micro-purchase threshold – effective July 1, 2018

On Wednesday, June 20 (please see below), the following Uniform Guidance procurement changes were communicated to the University community.

 

Subsequent to June 20 communication, the University received notification from the Federal Office of Management and Budget, that the micro-purchase threshold (MPT) was changed from $3,500 to $10,000 effective July 1, 2018. This communication can be viewed at:

https://www.whitehouse.gov/wp-content/uploads/2018/06/M-18-18.pdf

 

As a result of the notification, the following changes to the June 20 communication are effective beginning July 1, 2018: 

 

• Any purchases for goods and/or services against a Federal grant of $10,000 (previously this limit was $3,500) or more, in the aggregate, MPT will require three (3) quotes to be attached to the requisition in BobcatBUY.
• As a result of the MPT (effective July 1), workflow in BobcatBUY will be updated to require  users to indicate if the aggregate purchase per requisition is $10,000 (previously this amount was $3,500) or more against a Federal award(s) and attach the required three quotes for processing.
• As a result of the increased MPT to $10,000 (previously this amount was $3,500), no purchasing card per transaction limits require adjustment to remain in compliance with the new MPT of $10,000.

 

Please note that these changes will still go into  effective beginning July 1, 2018 and all other changes, as outlined in the June 20 communication, still apply.

As shared in the October 2017 and April 2018 Business Forum, the procurement changes required under Uniform Guidance take effect on July 1, 2018. These changes apply to all federal awards. A federal award can be determined by referring to the Award segment numbering in the chart of accounts. The Award number for a federal award starts with one of the following number schemes: 11XXXXX, 12XXXXX, 21XXXXX, 22XXXXX. 

Uniform Guidance (UG) is a set of regulations (see 2 CFR 200) that consolidates Federal regulations contained in OMB Circulars A-21 and A-110. UG significantly reforms federal grant making to focus resources on improving performance and outcomes. The intent is to reduce administrative burdens for grant applicants and recipients and reduce the risk of waste, fraud, and abuse.  Procurement guidance is specifically located in sections 200.317-200.326. This guidance focuses on increased competition and transparency in the procurement process, including conflict of interest.

Procurement Changes

Due to changes in UG, effective  July 1, 2018, any purchases for goods and/or services against a Federal grant of $3,500 or more, in the aggregate, (referred to as the micro-purchase threshold or MPT) will require three quotes to be attached to the requisition in BobcatBUY. This requirement will not apply to purchases made from Preferred Suppliers, regardless of the source of funds paying for the purchase, as those suppliers have already gone through the competitive bidding process and the University has determined pricing is reasonable under Federal regulations.

Acceptable forms of documentation from the supplier to support the three quotes requirement include:

• emails that include an email address from the supplier,
• a letter on supplier letterhead (hard copy or electronic form), or
• quotes obtained from a supplier website (please make sure that the web address is visible on the website quote)

System and Process Changes (BobcatBUY and Purchasing Card)

As a result of the micro-purchase threshold (effective July 1), workflow in BobcatBUY will be updated to require  users to indicate if the aggregate purchase per requisition is $3,500 or more against a Federal award(s) and attach the required three quotes for processing.

In addition, PCard per transaction limits will be reduced to comply with the MPT.  PCard per transaction limits that exceed the $3,500 MPT will be reduced to $3,499 per transaction in order to avoid compliance issues with the MPT requirements under UG. The cardholder must comply with all PCard policies and procedures and pyramiding transactions is unallowable. The exception process remains in place and planning units can request exceptions to the per transaction limit when needed. When asking for an exception, departments must now provide the account number that will be charged to ensure that the costs of the transaction will not be charged to any federal award. Departments will not be approved for exceptions to the PCard per transaction spending limits if spending occurs against a federal award in order to ensure compliance with UG and the requirement for three quotes.

Conflict of Interest

Spending against federal awards must be free of conflict of interest.  Under the Uniform Guidance (see sections 200.318(c)(1) and 200.318(c)(2)), “no employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a federal award if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract.”

“Organizational conflicts of interest means that because of relationships with a parent company, affiliate, or subsidiary organization, the non-Federal entity is unable or appears to be unable to be impartial in conducting a procurement action involving a related organization.”

Ohio University purchasing practices must also follow Ohio Revised Code 2921.42 and the University Nepotism Policy 40.107.

If you believe you have a conflict of interest, please contact the Grants Accounting office immediately and before you make any purchases against a federal award. For all other conflict of interest issues please contact the Purchasing Office prior to purchasing any good or service.

Sole Source

Uniform Guidance also clarified when a sole source purchasing exemption is available for expenditures against Federal dollars:

1. The item is available only from a single source.

2. The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation. An emergency exists whenever the time required to act in accordance with regular procedures would endanger life or property.

3. The federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request.

4. After solicitation of a number of sources, it is determined the competition is inadequate.

 

Documentation that supports a sole source request must be attached to the request for purchase in BobcatBUY. For a single source to be valid there must be written confirmation from the supplier confirming they are a sole source of the item being purchased or documentation from the proposal with federal approval.

Support resources

To support campus through this transition, Finance is developing reference materials to assist users in determining when quotes are required and how to determine if the purchase is on a Federal Award. These resources will be distributed once finalized and published on the Finance website and will be available before July 1.

Impact of violation

UG requires agencies receiving federal funds to have internal controls that comply with the requirements. Following the new procurement guidelines and the supporting processes ensures that the University will be in compliance. In instances of non-compliance the Federal agency can impose remedies for non-compliance including disallowance of costs to the federal grant, discontinuance of federal funding for program(s), or even termination of federal program(s).

Next steps

This does not require current action from campus but reminders about the change will be communicated again as we approach the July 1 effective date. If you have questions, please contact your planning unit CFAO or Grants Accounting.