Third Party Procurement
Frequently Asked Questions
Q = Question; A = Answer
Q. Can small transit properties establish a small purchase threshold of $100,000?
A. Yes, unless further restricted by State or local laws and procedures. FTA Circular 4220.1F, Ch. VI, §3.b., allows, but does not mandate, simplified small purchase procedures up to $100,000. As a method of procurement, small purchase procedures recognize that it could cost more to conduct formal competitions than the value expected to be yielded by those more formal procedures. Therefore, grantees are encouraged to use simplified methods when legal and feasible in light of their own procurement organization’s experience, training, and internal controls. (Revised June 2010)
Q. Our organization is now responsible for administering our own FTA Grants and needs guidance to ensure we comply with FTA guidelines. I am concerned with small purchases under $100,000 for commodities and everyday items (not construction contracts) i.e. motor oil, tires, bus repair parts, office supplies, copy machines, etc., anything that we need to run our day to day operations. I have studied the printed material regarding the Micro purchase threshold and Small purchase threshold and our County and State purchasing guidelines are stricter and will take precedence. A purchase over $500 requires three price quotes, over $1,000 requires written quote responses and over $10,000 requires a formal bid.
If we purchase tires (or anything else) on a regular basis and the annual total is under $10,000 are we required to prepare a formal quote that includes all the FTA clauses or are they only applicable when we exceed $100,000 annually in that commodity?
If we purchase tires (or anything else) on a regular basis and the annual total exceeds $10,000 but is still under $100,000 NY State law requires we prepare a formal bid. Are we required to include and attach all the FTA clauses to the bid?
If we purchase tires (or anything else) on a regular basis and the annual total exceeds $10,000 but is still under $100,000 but NYS OGS has a competitive bid in place that State law allows us to purchase from can we continue to use that bid or must be prepare and issue our own bid for the same specifications so that we can attach all the FTA clauses?
We wish to set up our procurement procedures so they meet FTA requirements but don’t want to make the process any more cumbersome than necessary.
A. The FTA threshold for small purchase procedures is $100,000 per procurement. Those procedures are discussed in the BPPM section 4.2 – Small Purchases. Your agency may have a number of purchases during the year for a commodity that are less than $100,000 each but more than $100,000 for the entire year. The threshold applies to each individual contract. We would caution you that if you award a contract to a particular supplier that is below $100,000 but add to it later so that it grows to more than $100,000, you must add the FTA required clauses for contracts above $100,000 once you cross that threshold. Thus, if you suspect this may happen, you should include the above $100,000 clauses initially. Of course, you should plan your purchases annually and consolidate where feasible to get the best prices and quality available, but limitations such as inventory space or program uncertainties may make it infeasible to consolidate into larger procurement packages. You will have to make those program/business judgments.
The FTA clauses required are determined by the value of each procurement using FTA’s dollar criteria, not your state or local criteria. The BPPM discusses the various clauses and instructions for each, including dollar criteria, in Appendix A.1.
If the non-construction procurements are under the federal micro-purchase threshold of $3,000, then there are no FTA clauses required. Micro-purchases are discussed in BPPM section 4.1 – Micro-Purchases.
The question of using a state GSA – type contract is discussed in the BPPM sections 18.104.22.168 – Intergovernmental Agreements, Joint Procurements, Piggybacking/ Assignments, and 6.3.3 – Joint Procurements of Rolling Stock and “Piggybacking.” Section 22.214.171.124 discusses the issue of grantees adding federal clauses to state GSA-type contracts (if they were initially awarded by the state without the clauses). FTA takes the position that grantees may add the required federal clauses in their first purchase orders against these contracts. (Reviewed June 2010)
Q. Reading the FTA Required Clauses section in the Best Practices Manual it says, "As part of their applications each year, recipients are required to submit a certification to the effect that they will not enter into contracts over $100,000 with suspended or debarred contractors and that they will require their contractors (and their subcontractors) to make the same certification to them." Am I required to include language in my RFPs and IFBs for procurements which may be less than $100,000?
A. You are required to include the Certification Regarding Debarment, Suspension, etc. only for procurements that equal or exceed the Federal procurement small purchase threshold, which is currently fixed at $100,000. You may refer to the Best Practices Procurement Manual, Appendix A, Clause 22 which incorporates the requirements of 2 C.F.R. part 180. (Revised June 2010)
Q. If the small purchase procurement method is used applying the Brooks Act procedures, does a formal RFP have to go out, or can qualifications be requested informally from various firms without advertising in the newspaper?
A. Small purchase procedures do not require formal RFPs. All that is required is that you solicit proposals from an "adequate number of qualified sources." The topic of Small Purchases is also discussed in the Best Practices Procurement Manual Section 4.2 - Small Purchases. As the BPPM states, the procedure envisioned by the Federal requirement is a "simple and informal" one, and solicitations and quotations may be either oral or written. (Reviewed June 2010)
Q. We have an estimate from one vendor who produces HR administration software for a $7,000 end-user license agreement. The first year support agreement is $3,000. Subsequent annual maintenance support agreement costs are $3,000. We are not locking ourselves into anything more than a 1-year contract if this firm is awarded following a competitive solicitation (follow-on annual maintenance support agreements are not required to operate the software). Our agency's simplified acquisition threshold is $25,000. Is this still considered within the simplified acquisition (small purchase) guidelines under FTA Circular 4220.1F, or should formal procedures requiring an RFP be used?
A. The simplified acquisition threshold, which is currently $100,000 at the Federal level but typically less for individual grantees (based on their own procurement policies), is applicable to the expected value of the procurement action presently being processed. This should include any options in the current contract if exercising them will result in a larger contract value that would exceed the simplified acquisition threshold. We do not believe the grantee should look beyond the current contract value (including options) when making a determination of whether the threshold for small purchases should apply. In this case, for example, the current contract value for licensing the software for the first year is only $7,000–$10,000. The agency is making no contractual commitment for future years. We would also note that software technology is changing so rapidly that it is simply good business practice not to contract long-term for software that may become obsolete. Based on these facts we see no reason for you to assume now that your contract will grow to $25,000, and we would advise that this action should be processed as a small purchase under your simplified acquisition procedures. (Reviewed June 2010)
Q. Is contacting one vendor for a price quote, by phone, FAX or email, and using a second vendor's price posted on the internet, without contacting the vendor, unequal access to information--since the second vendor doesn't have the same chance to offer a lower price? Background Information: A transit agency contacted two vendors by phone for price quotes, got three more vendor prices from the internet, and awarded to one of the first two vendors. We're discussing internally if this is unequal access to information.
A. If the procurement is above the micro purchase threshold of $3000, but less than the small purchase threshold of $100,000, the grantee is required to obtain competitive prices from an "adequate number of qualified sources" to ensure competition. We believe the grantee should solicit price proposals from an adequate number of qualified sources for the items it requires. This would include some form of solicitation that informed the vendors of the item's specifications, the quantities required, the delivery dates for the items, and any other relevant information needed to submit an informed bid. All prospective bidders must have access to the same information in order to ensure a fair competitive process and a public perception of fairness. (Posted: October, 2013)
Q. Our agency spends approximately $150,000 to $200,000 per year on Maintenance, Repair & Operations (MRO) supplies from a variety of sources. Each of the individual purchases fall below the formal threshold and many are even below the micro threshold. We understand that the FTA does not support the use of intergovernmental purchasing schedules or purchasing contracts and we intend on being fully compliant. Our MRO purchases are below the formal threshold so we request informal quotes to satisfy the competitive requirements. Each of the MRO suppliers has been awarded intergovernmental agreements and they are proving quotes at or below the pricing published in their intergovernmental agreement. In the spirit of transparency, can we award a number of MRO agreements with these vendors based on our aggregate annual spend provided we obtain multiple quotes for each purchase?
A. We would encourage you to adopt your suggested approach; i.e., to aggregate the various procurements by type of item and compete for your anticipated annual needs with competitive solicitations for the various items using the estimated annual quantities. You could award indefinite quantity contracts with minimum and maximum quantities stated in the contracts. (Posted: October, 2013)
Q. Will the threshold for small purchases be increased to $150,000 as per FAR regulations?
A. At this time, FTA has established $100,000 as the Simplified Acquisition Threshold and $3,000 as the ceiling for micro-purchases. This is based on the “small purchase threshold” established in DOT regulations, 49 CFR § 18.36(d)(1), for governmental grantees
(1) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the simplified acquisition threshold fixed at 41 U.S.C. 403(11) (currently set at $100,000).
DOT’s regulations for non-governmental grantees also uses the term “small purchase threshold.” 49 C.F.R.
(ee) Small awards means a grant or cooperative agreement not exceeding the small purchase threshold fixed at 41 U.S.C. 403(11) (currently $25,000 [out of date]).
On December 26, 2013, OMB issued final guidance, “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards,” (Super Circular) with instructions to Federal agencies to implement that guidance by December 26, 2014.
In that guidance, simplified acquisition threshold is increased to $150,000, and allowing periodic adjustments for inflation. 2 CFR § 19.2(ee) also uses the 41 U.S.C. 403(11) standard:
§ 200.88. Simplified Acquisition Threshold
Simplified acquisition threshold means the dollar amount below which a non-Federal entity may purchase property or services using small purchase methods. Non-Federal entities adopt small purchase procedures in order to expedite the purchase of items costing less than the simplified acquisition threshold. The simplified acquisition threshold is set by the Federal Acquisition Regulation at 48 CFR Subpart 2.1 (Definitions) and in accordance with 41 U.S.C. 1908. As of the publication of this Part, the simplified acquisition threshold is $150,000, but this threshold is periodically adjusted for inflation. (Also see definition of § 200.67 Micro-purchase.)
In that guidance, Micro-purchase remains at $3,000, and allowing periodic adjustments for inflation. 2 CFR § 200.67.:
§ 200.67 Micro-purchase.
Micro-purchase means a purchase of supplies or services using simplified acquisition procedures, the aggregate amount of which does not exceed the micro-purchase threshold. Micro-purchase procedures comprise a subset of a non-Federal entity’s small purchase procedures. The non-Federal entity uses such procedures in order to expedite the completion of its lowest-dollar small purchase transactions and minimize the associated administrative burden and cost. The micro-purchase threshold is set by the Federal Acquisition Regulation at 48 CFR Subpart 2.1 (Definitions). It is $3,000 except as otherwise discussed in Subpart 2.1 of that regulation, but this threshold is periodically adjusted for inflation.
§ 200.1 Definitions.
These are the definitions for terms used in this Part. Different definitions may be found in Federal statutes or regulations that apply more specifically to particular programs or activities. These definitions could be supplemented by additional instructional information provided in government-wide standard information collections.
When DOT promulgates its final implementing regulations, FTA will make any necessary changes to its guidance to conform it to those regulations.
FTA has not changed its policies regarding State GSA-type contracts that are awarded for the benefit of subordinate government agencies. If the State contract does not include Federal clauses, such as Buy America, the clauses may be added by the grantee with the first purchase order issued to a vendor under the State contract. The FTA policy may be found in FTA Circular 4220.1F, Chapter V, paragraph 4.c. The circular may be accessed online. (Posted: December, 2014)
Q. Has the Small Purchase threshold been changed from $100,000 to $150,000?
A. The $100,000 simplified acquisition threshold was raised to $150,000 by the OMB Super-Circular (2 CFR Part 200, adopted by the USDOT via 2 CFR Part 1201), which had an effective date of December 26, 2015. But the change only applies to "new" money -- in other words, for grants issued by FTA after Christmas 2014, the new ceiling applies, but for grants released by FTA prior to that date, the $100,000 threshold still remains. Note that the sum applies to the entire scope of the FTA-funded project, and not FTA's proportional share or to an individual line item or purchase item within that project.
(Posted: December, 2015)