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Informal Procurement Methods

 

Overview

When the estimated value of a procurement for goods or services is below the simplified acquisition threshold (or a lower local threshold) informal procurement methods can be used. Informal procurement expedites the process and minimize administrative burden and cost. There are two types of informal procurement, the micro-purchase and small purchase.

Micro-purchase

2 CFR §200.320(a)(1)

Informal acquisition of products or services up to $10,000 per transaction. SFAs have the option to establish a higher local threshold up to $50,000, or more. To increase the local threshold above $10,000, see self-certification requirements below and consult with the SFA’s internal finance department.

  • Increasing the threshold up to $50,000 requires a self-certification process. SFAs choosing to self-certify must include a justification, clear indication of the threshold, and supporting documentation of any of the following:
    • A qualification as a low-risk auditee, in accordance with the criteria in 2 CFR 200.520;
    • An annual internal institutional risk assessment to identify, mitigate, and manage financial risks; or
    • For public institutions, a higher threshold consistent with State law. 
  • Increasing the threshold beyond $50,000 requires approval by DPI.

Note: These options are pending further USDA clarification and guidance.


Micro-purchases can be awarded without soliciting competitive price quotes as long as the price is “reasonable”. To determine if a price is “reasonable”:

  • research by surveying qualified suppliers in the area;
  • use experience and personal knowledge of the item(s) being purchased;
  • and review purchase history by comparing previous purchases of similar item(s).

SFAs should distribute purchases equitably among qualified suppliers to the maximum extent practicable. "Should" means an expected course of action or policy that is to be followed unless inappropriate for a particular circumstance.

The distribution of transactions among qualified suppliers can happen either at the time of transaction, or over several transactions throughout the school year. For example, a school procuring produce may:

  • Choose one supplier to purchase produce from and then select a different supplier the next time produce needs to be purchased. Each transaction cannot exceed $10,000.
  • Choose various suppliers at the same time (i.e., Farmer's Market). Each transaction cannot exceed $10,000. 
  • Purchase various type of produce from Vendor A. The vendor will provide one receipt. The total transaction amount for Vendor A must be under $10,000. The next time you purchase produce, if prices are “reasonable”, you should purchase produce from Vendor B. The total transaction amount (receipt) must be under $10,000.

Reasons an SFA may want to procure non-competitively:

  • saving on administrative time and cost
  • unplanned purchases/delivery shortages
  • nominal purchases
  • seasonal or local purchase
  • Distribute purchases equitably among suppliers to grow future competition and diversify supplier choices.

Keep written documentation and records for all transactions.

Small Purchase

2 CFR §200.320(a)(2)

  • Commonly referred to as: "3 Bids and a Buy”.
  • Used when the estimated value of an awarded contract or purchase is below the simplified acquisition threshold of $250,000. SFAs may have a lower local threshold.
  • This informal method requires:
  • Verbal or written solicitation document.
  • Free and open competition (i.e. 2-3 price quotes).
  • Documentation of the procurement process (vendor name, contact method, name of person providing price quote, price quoted, date price quote obtained, duration of price quote).
  • This informal method does not require:
  • Public notice
  • Sealed bid (do not share price quotes during the solicitation process)
  • Public opening
  • Due date for solicitation responses