2 CFR 200 §§200.317–200.327 Procurement Standards

2 CFR 200, Subpart D sets the procurement standards a non-federal entity — a university, hospital, nonprofit, state agency, or Indian tribe — must follow when spending federal grant funds on goods or services. Codified at §§200.317–200.327 of the Uniform Guidance, it governs how a purchase must be competed and what must be checked before a contract is signed. It is a grant-spending rule for award recipients, not the Federal Acquisition Regulation (FAR) rule that applies when your institution itself bids as a contractor on a federal contract — the two systems share some of the same dollar thresholds by cross-reference, but they are separate compliance regimes with separate audiences.

This is also a different part of the regulation from Subpart E (the cost principles, §§200.400–200.475), which asks whether a specific cost is allowable at all. Subpart D assumes the purchase is otherwise a legitimate project cost and instead governs the process used to make it: how many bids were sought, whether the price was independently analyzed, whether the vendor was screened against the federal exclusion list, and whether the contract includes the clauses the award requires. An institution can buy something entirely allowable under Subpart E and still generate an audit finding under Subpart D because the procurement process itself didn’t meet the standard.

Thresholds and methods at a glance

The four figures and five methods below are what most people arrive at this page looking for. Full detail on each follows further down.

Micro-purchase threshold: $15,000. Effective from the October 1, 2025 FAR inflation adjustment (up from $10,000). Below this amount, no competitive quotes are required.
Simplified acquisition threshold: $350,000. Also effective October 1, 2025 (up from $250,000). Below this amount, informal small-purchase procedures apply instead of formal sealed bidding or competitive proposals.
Self-certified micro-purchase threshold: up to $50,000. A non-federal entity may raise its own internal micro-purchase ceiling this high based on a documented risk assessment; going above $50,000 requires cognizant-agency approval.
Five procurement methods, chosen by dollar amount and circumstance: micro-purchase, small purchase/simplified acquisition, sealed bid, competitive proposal, and noncompetitive (sole-source).
Documentation is not optional at any dollar level. Even a micro-purchase needs a basis for the price being reasonable; every procurement action needs some form of cost or price analysis on file.

Who has to follow these standards (§200.317)

§200.317 draws one real distinction: states and Indian tribes may follow their own procurement policies and procedures for federal awards, provided those policies conform to applicable federal law, and provided they still comply with the specific requirements in §§200.321, 200.322, 200.323, and 200.327 (small/minority/women-owned business contracting, domestic preferences, recovered materials, and required contract provisions). If a state or tribe has no such policy of its own, it defaults to the full §§200.318–200.327 standards. Every other non-federal entity — including a subrecipient of a state or tribe — follows §§200.318 through 200.327 in full, with no substitution option.

General procurement standards and conflict of interest (§200.318)

An institution must maintain and use documented procurement procedures that conform to the standards in this subpart. In practice, a sponsored-programs or procurement office’s written policy is what an auditor asks for first. §200.318 also requires the entity to:

Avoid acquiring unnecessary or duplicative items, and consider consolidating or breaking out procurements to obtain a more economical purchase, where appropriate.
Use its own documented normal procurement methods, provided they conform to federal law and the standards in this subpart.
Make positive efforts to use small, minority, women-owned, veteran-owned, and labor-surplus-area businesses (elaborated in §200.321, below).
Maintain records sufficient to detail the history of each procurement — rationale for the method used, contract type, contractor selection or rejection, and the basis for the contract price.
Award contracts only to responsible contractors possessing the ability to perform successfully, considering integrity, compliance with public policy, past performance, and financial/technical resources.

The conflict-of-interest rule specifically: §200.318 requires written standards of conduct covering conflicts of interest for any employee, officer, or agent engaged in the selection, award, or administration of a contract. Those written standards must, at minimum: require disclosure when an employee, their immediate family, partner, or an organization employing (or about to employ) any of them has a financial or other interest in a firm being considered for a contract; set disciplinary consequences for violations; and prohibit employees, officers, and agents from soliciting or accepting gratuities, favors, or anything of monetary value from current or prospective contractors, subcontractors, or parties to subagreements (a non-federal entity may set a de minimis value threshold for items like a promotional item, but the standards of conduct must state one). Competition rules separately prohibit organizational conflicts of interest — for example, a firm that helped write the specifications for a procurement also being allowed to bid on the resulting contract.

Competition requirements (§200.319)

All procurement transactions must be conducted in a manner providing full and open competition. §200.319 lists practices considered restrictive of competition that generally must be avoided, including:

Unreasonable requirements placed on firms in order for them to qualify to do business.
Unnecessary experience requirements or excessive bonding requirements.
Noncompetitive pricing practices between firms, or between affiliates.
Organizational conflicts of interest, as noted above.
Arbitrarily excluding otherwise-qualified firms from a solicitation, and specifying only a “brand name” product instead of allowing “an equal” product to be offered, unless a brand-name-or-equal description is used and justified.

The section also requires a documented, written procurement history and solicitation from an adequate number of qualified sources for any procurement conducted using the sealed-bid or competitive-proposal method.

The five procurement methods in detail (§200.320)

§200.320 sets out the procurement methods, with the dollar amount of the purchase generally determining which one applies:

Micro-purchases: purchases at or below the micro-purchase threshold. No competitive quotes are required if the entity considers the price reasonable — based on research, experience, purchase history, or other information — and it distributes micro-purchases equitably among qualified suppliers where practicable. The default federal micro-purchase threshold is $15,000 as of the October 1, 2025 inflation adjustment. A non-federal entity may self-certify a higher micro-purchase threshold, up to $50,000 per year, based on its own internal risk-assessment procedures; a threshold above $50,000 requires approval from the entity’s cognizant agency for indirect costs.
Small purchase procedures / simplified acquisitions: purchases above the micro-purchase threshold but at or below the simplified acquisition threshold — $350,000 by default, also from the October 2025 adjustment. Relatively simple, informal procedures, but still requiring price or rate quotations from an adequate number of qualified sources.
Sealed bids (formal advertising): publicly solicited bids, awarded to the lowest responsive and responsible bidder, using firm fixed-price contracts. Preferred for construction contracts when a complete, adequate specification is available, two or more responsible bidders are willing to compete, and award can be made principally on price.
Competitive proposals: used when sealed bidding isn’t appropriate (e.g. price alone isn’t the deciding factor). Requires an RFP, a publicized solicitation, identification of all evaluation factors and their relative importance, and a documented review of proposals against those factors, with award to the responsible offeror whose proposal is most advantageous, price and other factors considered.
Noncompetitive procurement (sole-source): permitted only in limited circumstances — the item is available from a single source; a public emergency won’t allow the delay of competitive solicitation; the federal awarding agency or pass-through entity expressly authorizes it in response to a written request; or competition is determined inadequate after solicitation from a number of sources. A noncompetitive award still requires the cost or price analysis described below.

Other required procurement provisions

§200.321 through §200.327 add several further requirements. Each applies regardless of which of the five methods above is used:

Small, minority, women-owned, veteran-owned, and labor-surplus-area firms (§200.321)

Where practicable, a recipient or subrecipient must take affirmative steps — placing qualified firms on solicitation lists, ensuring they’re solicited whenever they’re a potential source, dividing requirements into smaller tasks to permit maximum participation, and using the Small Business Administration and the Commerce Department’s Minority Business Development Agency — to assure these firms are considered.

Domestic preferences (§200.322)

As a matter of policy, recipients and subrecipients are encouraged to prefer goods, products, and materials produced in the United States, to the greatest extent practicable, consistent with Build America, Buy America requirements where those apply to the specific program.

Recovered materials (§200.323)

A non-federal entity that is a state agency, an agency of a political subdivision of a state, or its contractor must comply with EPA’s procurement guidelines for items containing recovered/recycled material, under Section 6002 of the Solid Waste Disposal Act.

Federal awarding agency or pass-through entity review (§200.325)

The awarding agency or pass-through entity retains the right to review procurement documents in specific circumstances — for example, a noncompetitive procurement above the simplified acquisition threshold, or a contract modification that significantly changes scope. Whether and how this right is exercised is generally set out in the award’s own terms and conditions.

Bonding requirements (§200.326)

For construction or facility-improvement contracts exceeding the simplified acquisition threshold, the awarding agency may accept the entity’s own bonding policy if it has determined the government’s interest is adequately protected. If not, minimum requirements apply: a bid guarantee equivalent to 5 percent of the bid price; a performance bond for 100 percent of the contract price; and a payment bond for 100 percent of the contract price.

Required contract provisions (§200.327)

Every contract funded with federal award money must contain the applicable clauses in Appendix II to 2 CFR Part 200. Depending on dollar value and contract type, these can include equal employment opportunity clauses (contracts over $10,000), the Davis-Bacon and Copeland “Anti-Kickback” Acts (construction contracts over $2,000), the Contract Work Hours and Safety Standards Act (contracts over $100,000), rights-to-inventions clauses implementing Bayh-Dole where federally funded research produces a patentable invention (see CASRAI’s tech-transfer resources), Clean Air Act and Federal Water Pollution Control Act requirements (contracts over $150,000), mandatory debarment/suspension screening, the Byrd Anti-Lobbying Amendment certification, and, since 2 CFR 200.216, a prohibition on procuring certain covered telecommunications and video-surveillance equipment.

Contract cost and price analysis (§200.324)

This is one of the sections auditors check most closely. A recipient must perform a cost or price analysis for every procurement action, including contract modifications — the level of detail scales with the complexity of the procurement, but some documented analysis is required even for a simplified acquisition. Key elements:

An independent estimate must be made before receiving bids or proposals, so the entity has something to compare quotes against.
Costs or prices must be based on all relevant information, including market prices for comparable goods/services, published price lists, and prior purchase history.
For a cost-reimbursement contract, profit must be negotiated as a separate element of the price, using a documented method — never an automatic markup.
Costs or prices based on estimated costs are only allowable to the extent they’re consistent with the cost principles in Subpart E — the specific point where Subpart D and Subpart E connect directly.

Debarment and suspension screening

Before entering into a covered contract, a recipient must verify the contractor isn’t excluded or disqualified from federal transactions, under 2 CFR Part 180 and §200.214. CASRAI covers the mechanics — the three permitted verification methods and the role of SAM.gov Exclusions — in a dedicated debarment/suspension screening entry; in short, a SAM.gov Exclusions check, a contractor certification, or an addressing contract clause each satisfies the requirement, and a debarment under either the procurement (FAR) or nonprocurement (2 CFR Part 180) system blocks covered transactions government-wide.

Common audit findings and mistakes to avoid

Procurement is one of the most frequently cited areas in a Single Audit. The recurring patterns, all traceable to specific requirements above:

No cost or price analysis on file — the single most common finding under §200.324. Auditors expect a documented independent estimate for every procurement action, including modifications, even when the price ultimately paid looks reasonable in hindsight. The standard requires the analysis itself, not just a reasonable outcome.
Self-certified micro-purchase threshold raised without a documented risk assessment, or raised above $50,000 without the required cognizant-agency approval.
Sole-source awards without a written justification establishing which of the limited permitted circumstances applied.
Restrictive specifications — a brand-name requirement with no “or equal” language and no documented justification, or specifications written with input from a firm that then bids on the resulting contract.
Missing or incomplete written standards of conduct covering procurement conflicts of interest, or no record that a disclosed conflict was actually evaluated.
Skipped debarment/suspension screening, or a screening performed but not documented anywhere in the procurement file.
Required Appendix II contract clauses missing from a contract, particularly on construction and higher-value service contracts where several dollar-triggered clauses apply at once.
No written procurement procedures, or procedures on paper that the institution’s actual practice doesn’t follow — auditors test what actually happened against the policy, not just whether a policy document exists.

How Subpart D interacts with Subpart E

Subpart D and Subpart E are frequently confused because both eventually reach the same question — “was this money spent correctly?” — from different directions:

Subpart D (procurement standards, this page) governs the process: how the purchase was competed, documented, priced, and contracted.
Subpart E (cost principles) governs the substance: whether the resulting cost is allowable, allocable, and reasonable on a specific federal award.

A purchase can fail either test independently. A properly competed, well-documented procurement can still produce an unallowable cost if it’s not allocable to the award that paid for it. Conversely, an unquestionably allowable expense — office supplies genuinely needed for the project — can still generate an audit finding if the institution skipped the required cost/price analysis or didn’t solicit an adequate number of quotes. CASRAI’s broader Uniform Guidance overview and Federal Grant Compliance Checklist both touch procurement briefly as part of the full compliance picture; this page is the detailed reference for that one piece.

Frequently asked questions

What’s the current micro-purchase threshold under 2 CFR 200?

The federal default is $15,000, effective from the October 1, 2025 inflation adjustment (up from the prior $10,000). A non-federal entity may self-certify a higher threshold, up to $50,000 annually, using its own documented risk-assessment procedures; anything above $50,000 needs cognizant-agency approval.

What’s the difference between the micro-purchase threshold and the simplified acquisition threshold?

The micro-purchase threshold ($15,000 by default) is the ceiling below which no competitive quotes are required at all. The simplified acquisition threshold ($350,000 by default, also adjusted October 2025) is the ceiling below which an entity can use informal small-purchase procedures — still requiring quotes from an adequate number of sources — instead of formal sealed bidding or competitive proposals.

Does 2 CFR 200 procurement apply to my institution’s federal contracts, or only to grants?

2 CFR 200 Subpart D applies when your institution is spending federal grant or cooperative-agreement funds to buy goods or services from a vendor. It is not the rulebook for when your institution is itself bidding as a contractor on a federal contract — that is the Federal Acquisition Regulation (FAR). The two frequently share the same dollar thresholds because 2 CFR 200.1 cross-references the FAR’s figures, but they are separate compliance systems with different applicability and different audiences.

Do state and local governments have to follow these same procurement standards?

States and Indian tribes may use their own procurement policies for federal awards instead, provided those policies conform to applicable federal law and the entity still meets the specific requirements at §§200.321, 200.322, 200.323, and 200.327. If a state or tribe has no policy of its own, or a subrecipient isn’t a state or tribe, the full §§200.318–200.327 standards apply.

Is a sole-source (noncompetitive) purchase ever allowed?

Yes, in limited circumstances: the item is available from only one source, a public emergency doesn’t allow time for competitive solicitation, the funding agency or pass-through entity expressly authorizes it, or competition was determined inadequate after a genuine solicitation attempt. A documented cost or price analysis is still required even for a noncompetitive award.

What happens if an institution doesn’t perform a required cost or price analysis?

It’s a common audit finding. Auditors and federal awarding agencies expect a documented independent estimate and analysis on file for every procurement action, including contract modifications — the absence of one is flagged even where the eventual price paid looks reasonable in hindsight, because the standard requires the analysis itself, not just a reasonable outcome.

This page summarizes 2 CFR Part 200, Subpart D as codified in the current eCFR text. It is a general reference, not legal advice — an institution’s own sponsored-programs or procurement office, and its cognizant federal agency, are the authoritative source for how these standards apply to a specific award.