Splitting

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Q. When making small purchases, with the threshold of $10,000, it is my understanding that the threshold applies to each purchase. Understanding that splitting purchases to stay under a designated threshold is not allowed, if purchases are made with a particular vendor based on competitive solicitations, are each purchase seen as an individual purchases. In other words if small purchases are made with vendor X, each being under the $10,000 threshold but the total amount of purchases over the course of a year equal more than the $10,000, can small purchase procedures still be followed?

A. The FTA threshold for individual small purchases is $100,000. For individual procurements equal to or less than $100,000, grantees are required to obtain competitive prices from an “adequate number” of sources to ensure competition. These procurements do not need to be advertised but enough bids must be obtained to ensure adequate competition. As you also note, purchases may not be split to avoid advertising. This does not mean that sometime in the next 12 months another need may arise for the same item that, when added to the previous buy, would cause the total to exceed the threshold. It does mean, however, that if there is a recurring need for this item and history demonstrates that additional items will probably be required, FTA would expect you to advertise the procurement and award a contract for the anticipated needs over the next 12 months, or perhaps longer, (e.g., using an IDIQ type of contract or a Requirements contract). The term of the contract would be determined by good business considerations, including inventory management issues. The Best Practices Procurement Manual (BPPM) discusses these types of contracts in section 2.4.5, Indefinite Delivery Contracts. The BPPM is available online: http://www.fta.dot.gov/12831_6186.html#C2_4_5

If your local regulations require advertising for procurements above $10,000, the same principles noted above would apply, except to a smaller dollar threshold. You should estimate your needs for the required items annually, and conduct a competitive procurement in accordance with those anticipated needs. (Posted: August, 2013)

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