Micropurchases

Q. What is the amount a purchase of services or goods must be under  before a sole source justification or a competitive bidding process is necessary? I have been taught $2,500 per the Federal Acquisition Regulation, but have heard conflicting information.

A. The FAR micropurchase threshold was raised from $2,500 to $3,000 in 2006. Purchases under $3,000 are considered micropurchases and are exempt from the requirement to obtain competitive quotes or process a sole source justification (FAR 13.202). (Revised: September 4, 2009)

Q. If we make a micro-purchase and a few days later we receive another requirement (same Requester/same Supplier) for additional items that would make the overall purchase a Small Purchase when we do a Change Order to the original Purchase Order, how do we handle this situation when a portion of the total requirement was already purchased without competition?

A. We would advise the requisitioner that splitting procurements to avoid competition is prohibited. If the requisitioner requires the same supplier's item for this follow-on procurement (e.g., for reasons of standardization, etc.), then we would process this as a new "sole source" procurement (not as a change order).  You should document the file to establish why this procurement was not foreseen when the original requisition was processed, and obtain the necessary agency approvals for executing a sole source award.  If, however, the agency can accept a different vendor's materials, then you should compete this requirement using small purchase procedures (with a limited number of quotes) instead of processing it as a non-competitive micro-purchase. (Revised: September 4, 2009)

Q. What is the spending limit when competitive price quotes are not required?

A. The Federal Dollar ($) threshold for awarding contracts/purchase orders without competitive quotes is $3,000 and below.  If you are using Federal funds (FTA grants), you may award contracts non-competitively up to $3,000.  However, you must document the file as to how you determined the price to be reasonable. You should check your local procurement regulations since your local requirements may be different than the federal requirements.  See FTA Procurement Circular 4220.1F Chapter VI, Micro-Purchases.  (Posted: December 2009)

Q. The FTA Circular 42120.1F is inconsistent in its definition of micro-purchases.

3. METHODS OF PROCUREMENT......

a. Micro-Purchases. Consistent with the Federal Acquisition Regulation (FAR), FTA considers micro-purchases to be those purchases of 3,000 or less. 

(But then states)

(1)  When Appropriate. If permitted by State and local law, the recipient may acquire property and services valued at less than $3,000 without obtaining competitive quotations.

The two subparagraphs appear inconsistent. Is a purchase of exactly $3,000 a micro-purchase or not?

A. The inconsistency in the FTA Circular has been corrected in the April 14, 2009 revision.  The corrected version defines micro-purchases as those of $3,000 or less. (Posted: January 2010)

Q. We purchase items regularly as micro-purchases. These micro-purchases are from numerous vendors. Over the course of a year, these purchases may exceed $30,000 from several vendors. Are we required to treat the accumulation of micro-purchases as a small purchase or a competitive procurement process? Are micro purchases determined by individual item value or value of accumulated items from a vendor for a full year?

A. The FTA Best Practices Procurement Manual (BPPM) discussed Micro-purchases in section 4.1.  The micro-purchase procedures apply to individual purchases of $3,000 or less.  The dollar threshold does not apply to all purchases made from a particular vendor during a calendar year.  However, purchases must not be split to avoid the requirement for competition.  To the extent feasible, we would advise that the user departments of the items being purchased be required to prepare an annual procurement plan estimating their annual requirements for the micro-purchase type items allowing the procurement office to issue a competitive solicitation leading to the award of indefinite - quantity - indefinite - delivery (IDIQ) type contracts to one (or more) vendors at firm prices for a reasonable period of time, which may be one year (depending on the stability of prices for the items being procured). If you are successful in consolidating your agency micro-purchases, it should lead to better pricing and a better utilization of your procurement staff by reducing the number of procurements being processed. (Posted: March 2010)

Q. Are there any times when obtaining 3 prices quotes is not necessary when purchasing items for the office.  For instance, does one have to obtain three price quotes when looking to obtain something as simple as several reams of paper with a total cost of less than $200.00?

A. FTA Circular 4220.1F, Chapter VI 3 a. states that procurements of $3000 and less need not be competitively awarded - that is, you do not need competitive quotes. You must, however, document the file to state that the price being paid is fair and reasonable and the basis for the determination. Be sure to check your state and local regulations as well, as they may require competitive quotes at lesser dollar values.  (Posted: June 2010)

Q. Are there any times when obtaining 3 prices quotes is not necessary when purchasing items for the office.  For instance, does one have to obtain three price quotes when looking to obtain something as simple as several reams of paper with a total cost of less than $200.00?

A. FTA Circular 4220.1F, Chapter VI 3 a. states that procurements of $3000 and less need not be competitively awarded - that is, you do not need competitive quotes.

You must, however, document the file to state that the price being paid is fair and reasonable and the basis for the determination. Be sure to check your state and local regulations as well, as they may require competitive quotes at lesser dollar values. The FTA Circular is available online:
http://www.fta.dot.gov/documents/FTA_Circular_4220.1F_-_Finalpub1.pdf
(Posted: September, 2010)

Q. Chapter VI, PARA VI, addresses Micro Purchases.  It states "If permitted by State and local law, the recipient may acquire property and services valued at $3,000 or less without obtaining competitive quotations." The August 21, 2009 FTA Frequently Asked Questions states "The independent cost estimate is a tool to assist in determining the reasonableness or unreasonableness of the bid or proposal being evaluated and is required for all procurements regardless of dollar amount."  Is an independent cost estimated required for micro-purchases?

A. An independent cost estimate is not required for micro-purchases.  A determination of price reasonableness is, however, required.  See FTA Circular 4220.1F, paragraph 3.a. (2) (c), which states, "The only documentation required for micro-purchases is a determination that the price is fair and reasonable."  The Circular may be found online: http://www.fta.dot.gov/laws/circulars/leg_reg_8641.html  (Posted: November, 2010)


Q. For micro-purchases, when I obtain 2 or more competitive quotes for a requirement and attach those quotes to the procurement file, are we required to further document the file?

A. FTA requires grantees to document the file for a micro-purchase that the price being paid is fair and reasonable. The buyer must affirmatively state that he/she has determined the price is reasonable based on such facts as recent agency purchases, prices published by vendors in catalogues, prices offered by local stores, etc. The existence of two quotes does not satisfy the FTA requirement that the buyer make an affirmative determination in the file that the price being paid is known to be reasonable. The existence of a second higher price quote does not in itself demonstrate that the lower price is reasonable. What would demonstrate that fact would be sales of the item at that price to the general public.
(Posted: December, 2011)

Q.
The Internet site states $2,500 as the threshold for a "micro-purchase." I attended an NTI course on procurement for small transit systems and the material says the micro-purchase threshold is $3,000. Which is correct? ALSO - if my state defines a "small purchase" as a figure lower than the FTA's definition am I required to use the state definition?

A. FTA Circular 4220.1F defines micro-purchases as those valued at $3000 or less (FTA Circular 4220.1F, Chapter VI, paragraph 3.a.). This is the current FTA threshold. If your State is using a lower value for micro-purchases you must follow the State regulations, as FTA requires grantees to comply with both Federal and State regulations where possible (FTA Circular4220.1F, Chapter II, paragraph 4). The FTA Circular is available online: http://www.fta.dot.gov/legislation_law/12349_8641.html (Posted: August, 2013)


Q. If you send a bus to a local vendor for minor repairs, and in the course of those repairs it is determined the bus will need additional repairs that will bring the cost above the micro-purchase threshold; what/where is the guidance/reference?

A. We assume from your question that the work ordered under the purchase order for the initial repairs is being or has been completed, and additional repairs are now seen as necessary. If the cost of the additional repairs is below the micro-purchase threshold of $3,000 we would suggest that you could award another purchase order for the additional repairs under the micro-purchase procedures; i.e., without having to obtain competitive quotes. If the estimated cost exceeds $3,000 for the additional work, you will have to solicit competitive quotes for that work. (Posted: November, 2013)