Welcome to Feldesman’s Grants Practice Shorts series where we discuss helpful tips and strategies in common areas of federal grant management. Be sure to check out our other installments on our Grants Practice Shorts page.

Non-Competitive Procurement

Procurements of property or services under a federal award must be conducted in a manner that provides full and open competition. See 2 C.F.R. § 200.319. However, federal grant rules permit “non-competitive” procurements, where grantees may proceed with a procurement transaction without a competitive process, in five (5) specific circumstances: (i) procurements under the Micro-Purchase Threshold (“MPT”) do not require competition (MPT currently stands at $10,000); (ii) the item is available only from one source; (iii) public emergency; (iv) when expressly authorized by the agency or pass-through entity; and (v) if, “[a]fter solicitation of a number of sources, competition is determined inadequate.” See 2 C.F.R. § 200.320(c).

These limited “sole sourcing” scenarios reflect that non-competitive procurement is the exception and not the rule in federally funded programs. Per 2 C.F.R. §§ 200.318(i), grantees are required to maintain documentation in the procurement file to support the decision to procure through a non-competitive method when competition would otherwise be required, i.e. procurements above the MPT.

In addition, presently grantees are to evaluate profit separately for non-competitive procurements in excess of the S.A.T. 2 C.F.R. § 200.324(b); CFO Council “2 C.F.R. FAQs” Q – 94. Therefore, the grantee’s procurement file should document actions directed at evaluating profit separately. This practice will no longer be expressly required when OMB’s Uniform Guidance revisions go into effect for awards made after October 1, 2024. See 89 Federal Register 30086 (April 22, 2024) (deleting § 324(b)).

Finally, we note that States conduct non-competitive procurements according to their respective sole sourcing rules because States follow their own policies and procedures when procuring property or services under a Federal award. See 2 C.F.R. § 200.317. This flexibility will also apply to Indian Tribes after the Uniform Guidance revisions go into effect. See 89 Federal Register 30084.

For questions concerning our Grants Practice Shorts series, please contact Phillip A. Escoriaza, Senior Counsel, at 202.466.8960 or pescoriaza@feldesman.com.