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Posted July 2025Several months ago … (checks watch) … several years ago, in June of 2023, I wrote an article here about government procurement in general and Federal procurement in particular
On October 1, 2024, the Office of Management and Budget enacted the most significant revisions to the 2 CFR 200 Uniform Guidance since the regulations were first issued. Why? The stated reasons are (1) to reduce administrative burden on Federal agencies and state recipients of Federal funds, and (2) to use “plain language” to clarify complicated sections. While one may be tempted to think these changes are reflective of the executive branch regime change that occurred at the beginning of 2025, the revisions were announced in the Spring of 2024 and thus predate the current administration.
Although the Uniform Guidance applies to all areas of Federal grant administration, we will focus here on the changes affecting procurement. For the most part, the rules themselves haven’t changed, but there are some areas that have changed that I will point out.
I’m afraid to look back at my prior article, but I’m sure I mentioned that the standard of Federal procurement is “full and open competition.” That has not changed, but what constitutes “full and open competition” according to the regs seems to be more lenient for smaller purchases. 2 CFR 200.320 says that “informal procurement methods” can be used for these purchases, and here is where we can see a change to the language. Pre-October 1, the section read as follows:
Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost.
WHAT?? How much administrative burden and cost did it take just to read that? In contrast, here is the revised section:
Informal procurement methods for small purchases. These procurement methods expedite the completion of transactions, minimize administrative burdens, and reduce costs. Informal procurement methods may be used when the value of the procurement transaction under the Federal award does not exceed the simplified acquisition threshold as defined in § 200.1.
Not only is this easier to read, but there is also a perceived softening of the language. Informal procurement has gone from something that “may” be used because formal procurement is “not required”, to something that is perfectly acceptable for the sake of reducing administrative burden and costs. So far, so good.
Next, there is some clarity offered for micro purchases. Recall that this is generally any purchase of $10,000 or less in the aggregate. The general rule - that these purchases can be made without competitive price or rate quotations - remains the same. Micro purchases are also required to be price reasonable, as determined by research, experience, purchase history, or other information. The previous version of the rule stated that price reasonableness is only shown when the purchaser “documents its files accordingly.” The new rule changes this to “maintains documents to support its conclusion.” The change is small, but it softens the language and should provide a little more comfort when preparing an audit file.
One more small change before we get to the big one. Recall that small purchases are those with an aggregate dollar amount between $10,000 and $250,000. For these purchases, the old rule stated “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity.” No other guidance is offered as to what constitutes an “adequate” number. The new rule still provides that price or rate quotations must be obtained from an adequate number of qualified sources, however, it adds that “the recipient or subrecipient may exercise judgment in determining what number is adequate.” The new language is plain and makes it clear that the purchaser can use discretion in determining how many quotes is enough. Provided the file is adequately documented and the measures taken are reasonable, the rule will be satisfied.
Now for the big change. Without looking back at my old article, which is always a terrifying thought, I can guess with reasonable certainty that I spoke at length about the M/WBE outreach requirements of 2 CFR 200.321. The old rule stated:
The non-Federal entity must take all necessary affirmative steps to assure that minority businesses, women’s business enterprises, and labor surplus area firms are used when possible.
It then goes on to say that “[a]ffirmative steps must include …” before providing an enumerated list of six steps. The key to the old rule is the word “must.” It is a rigid and inflexible requirement that results in audit findings and potential clawback when it is violated.
The new rule has done almost a 180 from the prior rule:
When possible, the recipient or subrecipient should ensure that small businesses, minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms (See U.S. Department of Labor’s list) are considered as set forth below.
It goes on to say that “such consideration means …” before listing the six steps (which have also been softened). Two enormous takeaways from this are, first, “must” has become “when possible.” It is still a rule, but it is not rigid and inflexible. Yes, the purchaser must still document that the rule has been complied with. However, that documentation now can be a demonstration that, for instance, outreach was impractical because there were no M/WBE vendors who supplied a specialized product. Or only one or two of the steps were followed because the others were deemed impractical.
Second, the types of businesses that outreach should be made to has been broadened. Small businesses and veteran-owned businesses have been added to the list. This broadens the scope of the rule somewhat, but it also creates more options for compliance.
Although the old rule was well-meaning, its strictness created administrative cost and headache for any recipient or subrecipient of a Federal award. The new rule will carry forward the spirit of the old rule, with the same or better actual results, while easing the administrative cost of compliance.
There are other changes to the procurement rules, such as dropping the requirement that sealed bids be opened publicly for Tribal entities. But the changes to the informal procurement and M/WBE outreach rules will probably (hopefully) have the biggest impact in alleviating costly administrative overhead.
One last thing: the updated Uniform Guidance went into effect on October 1, 2024. What federal awards do they apply to? Awards which are issued on or after October 1, 2024. This means that awards that were made prior to October 1, 2024, such as Mississippi’s award of State and Local Fiscal Recovery Funds, are still subject to the old rules. The only exception is if the Federal awarding agency expressly adopts the new rules for an older award. Thus, until all pre-October 1 Federal awards have reached their expenditure deadline, you will have to know both sets of rules if you intend to work in this area.
