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How must a federal award recipient buy goods and services?

Source last checked: 1 November 2026 · 2 CFR Part 200, 2025 edition (govinfo PDF)

Which rule applies to you before any method question

If you are a recipient or subrecipient of a federal award that is not a State or an Indian Tribe, the procurement standards in 2 CFR 200.318 through 200.327 are binding on you directly. That includes subrecipients of a State or Indian Tribe. Source: 2 CFR 200.318, page 46 (govinfo PDF).

A State or an Indian Tribe is treated differently. When conducting procurement transactions under a federal award, it must follow the same policies and procedures it uses for procurements with non-federal funds, and only falls back on 200.318 through 200.327 if such policies and procedures do not exist. Even then it must comply with 200.321, 200.322, 200.323 and 200.327 on top of its own rules. So a State agency asking which method the Uniform Guidance forces on it is usually asking the wrong question: its own state procurement code governs the method. Source: 2 CFR 200.317, page 45 (govinfo PDF).

Whoever you are, the written-procedures duty comes first. You must maintain and use documented procurement procedures that are consistent with State, local and tribal laws and with the standards in 200.317 through 200.327. The method ladder below only tells you what those procedures have to permit; it does not substitute for having them. Source: 2 CFR 200.318(a), page 46 (govinfo PDF).

The value of the transaction picks the method

You do not choose freely between competitive and informal buying. The aggregate value of the procurement transaction decides which family of methods is open to you, and 200.320 names the families in its own opening words.

There are three types of procurement methods described in this section: informal procurement methods (for micro-purchases and simplified acquisitions); formal procurement methods (through sealed bids or proposals); and noncompetitive procurement methods.2 CFR 200.320, page 48

Informal methods may be used when the value of the transaction under the federal award does not exceed the simplified acquisition threshold as defined in 200.1, and you may set a lower threshold for yourself. Formal methods are required when the value exceeds the simplified acquisition threshold you determined; they are competitive and require public notice. Source: 2 CFR 200.320(a) and (b), pages 49–50 (govinfo PDF).

Note what the rule is measuring. It is the aggregate amount of the procurement transaction, not the size of your award and not the annual spend with that supplier. And the general competition duty sits above all of it: every procurement transaction under the federal award must be conducted in a manner that provides full and open competition. Source: 2 CFR 200.319(a), page 48 (govinfo PDF).

Micro-purchases: buying without quotations, with a documented threshold

A micro-purchase may be awarded without soliciting competitive price or rate quotations, provided you consider the price reasonable based on research, experience, purchase history or other information, and you keep documents supporting that conclusion. Purchase cards may be used as the method of payment. To the extent practicable, micro-purchases should be distributed equitably among qualified suppliers. Source: 2 CFR 200.320(a)(1), page 49 (govinfo PDF).

The threshold itself is yours to set and yours to defend. You are responsible for determining and documenting an appropriate micro-purchase threshold based on internal controls, an evaluation of risk and your documented procurement procedures, and the threshold you use must be authorised or not prohibited under State, local or tribal law. Source: 2 CFR 200.320(a)(1)(iii), page 49 (govinfo PDF).

Going above the FAR figure has a documented route. You may self-certify a threshold up to $50,000 on an annual basis and must keep documentation available to the federal agency or pass-through entity and to auditors under 200.334. The self-certification must include a justification, clear identification of the threshold, and supporting documentation of one of the following: a qualification as a low-risk auditee under the criteria in 200.520 for the most recent audit; an annual internal institutional risk assessment to identify, mitigate and manage financial risks; or, for public institutions, that a higher threshold is consistent with State law. Source: 2 CFR 200.320(a)(1)(iv), page 49 (govinfo PDF).

Above $50,000 the self-certification route closes. A micro-purchase threshold higher than $50,000 must be approved by the cognizant agency for indirect costs, on a request that includes the same material as the self-certification. The increased threshold is valid until any factor relied on in establishing it changes — which means a change in your audit status or your risk assessment quietly invalidates it. Source: 2 CFR 200.320(a)(1)(v), page 49 (govinfo PDF).

Simplified acquisitions: quotations from an adequate number of sources

If the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold, you may use simplified acquisition procedures, and then price or rate quotations must be obtained from an adequate number of qualified sources. Unless the federal agency specifies a number, you may exercise judgment in determining what number is adequate. Source: 2 CFR 200.320(a)(2), page 49 (govinfo PDF).

Your simplified acquisition threshold is also self-determined, but it has a ceiling you cannot move. You are responsible for determining an appropriate threshold based on internal controls, an evaluation of risk and your documented procurement procedures, which may be lower than, but must not exceed, the threshold established in the FAR. The definition in 200.1 says the same thing from the other side: the FAR figure at 48 CFR part 2, subpart 2.1 is used in this part as the simplified acquisition threshold, and your threshold must never exceed it. Source: 2 CFR 200.320(a)(2)(ii), page 49, and 2 CFR 200.1, page 16 (govinfo PDF).

So the asymmetry is deliberate. The micro-purchase threshold can be pushed above the FAR figure with paperwork; the simplified acquisition threshold cannot be pushed above the FAR figure at all.

Formal methods: sealed bids and proposals

Above your simplified acquisition threshold, buying becomes competitive and public. Sealed bids means bids are publicly solicited through an invitation, and a firm fixed-price contract, lump sum or unit price, is awarded to the responsible bidder whose bid conforms with all the material terms and conditions of the invitation and is the lowest in price. The sealed bids method is preferred for procuring construction services. Source: 2 CFR 200.320(b)(1), page 50 (govinfo PDF).

Sealed bidding is only feasible where a complete, adequate and realistic specification or purchase description is available, two or more responsible bidders have been identified as willing and able to compete effectively for the business, and the procurement lends itself to a firm-fixed-price contract where the successful bidder can be selected principally based on price. If you use it, bids must be solicited from an adequate number of qualified sources with sufficient response time; for local governments the invitation for bids must be publicly advertised and the bids must be opened publicly; all bids are opened at the time and place prescribed in the invitation; and you must document and provide a justification for every bid you reject. Source: 2 CFR 200.320(b)(1)(i) and (ii), page 50 (govinfo PDF).

Proposals is the method used when conditions are not appropriate for using sealed bids, and it may result in either a fixed-price or a cost-reimbursement contract. Requests for proposals require public notice, all evaluation factors and their relative importance must be identified, and proposals must be solicited from multiple qualified entities. To the maximum extent practicable, any proposal submitted in response to the public notice must be considered. You must have written procedures for conducting technical evaluations and making selections, and the contract must be awarded to the responsible offeror whose proposal is most advantageous to you considering price and other factors. Source: 2 CFR 200.320(b)(2), page 50 (govinfo PDF).

There is one narrow variant worth knowing. Competitive proposal procedures may be used for qualifications-based procurement of architectural and engineering professional services, where the offeror's qualifications are evaluated and the most qualified offeror is selected subject to negotiation of fair and reasonable compensation. Because price is not used as a selection factor, that method can only be used to procure architectural and engineering professional services, and may not be used to purchase other services provided by A/E firms that are a potential source to perform the proposed effort. Source: 2 CFR 200.320(b)(2)(iv), page 50 (govinfo PDF).

Noncompetitive procurement: only in the circumstances the rule lists

Noncompetitive buying is not a judgment call you can justify after the fact. Noncompetitive procurements can only be awarded in accordance with 200.320(c), and that paragraph states its own closed list.

The noncompetitive procurement method may only be used if one of the following circumstances applies: (1) The aggregate amount of the procurement transaction does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The procurement transaction can only be fulfilled by a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from providing public notice of a competitive solicitation; (4) The recipient or subrecipient requests in writing to use a noncompetitive procurement method, and the Federal agency or pass-through entity provides written approval; or (5) After soliciting several sources, competition is determined inadequate.2 CFR 200.320(c), page 51

Read the emergency ground narrowly: what must be impossible is the delay resulting from giving public notice, not the delay caused by your own planning. And the written-approval ground is prospective — you request in writing and the federal agency or pass-through entity approves in writing, which is not the same as explaining the sole-source choice in a later audit response. Source: 2 CFR 200.319(g), page 48, and 2 CFR 200.320(c), page 51 (govinfo PDF).

A worked example: a nonprofit buying a spectrometer

This example is not in the regulation. It is how the ladder above resolves in a case that comes up constantly, and the point of it is that the same equipment lands in a different method depending on one number you set yourself.

A research nonprofit holds a federal award. Its documented procedures set a micro-purchase threshold at the FAR figure and a simplified acquisition threshold below the FAR ceiling. It needs a spectrometer with a service contract.

• Quoted at a price inside the micro-purchase threshold. It may buy without soliciting competitive quotations, because it judges the price reasonable from purchase history for the same instrument and files the documents that support that judgment. It should also avoid sending every such purchase to the same supplier, because micro-purchases should be distributed equitably among qualified suppliers to the extent practicable.
• Quoted above micro-purchase but inside its simplified acquisition threshold. Now quotations must come from an adequate number of qualified sources. Nothing in the rule says how many; the nonprofit decides, and its decision is only defensible because its written procedures say what adequate means for this class of purchase.
• Quoted above its simplified acquisition threshold. Formal methods apply, with public notice. Sealed bids do not fit well here, because selection will turn on technical performance and service response as well as price, so proposals is the method: public notice, evaluation factors and their relative importance identified in advance, solicitation from multiple qualified entities, written technical evaluation procedures, and award to the most advantageous proposal considering price and other factors.
• Only one manufacturer makes an instrument meeting the specification. That is the single-source ground, and it survives audit only if the specification is genuinely a requirement rather than a preference written around a favoured brand. Specifying only a brand name instead of allowing an equal product to be offered is listed in 200.319(c) as an example of a situation that may restrict competition.

The instructive part is the third and fourth cases colliding. A specification that narrows the field to one supplier does not relieve you of the formal method; it turns the file into an argument about whether the specification was necessary. Source: 2 CFR 200.319(c), page 48, and 2 CFR 200.320, pages 49–51 (govinfo PDF).

How this differs from the FAR regime with similar words

The vocabulary overlaps and the regimes do not. 2 CFR 200.320 governs how a recipient of federal assistance buys with award money. FAR Part 13 governs how a federal agency itself buys using simplified acquisition procedures. Both say micro-purchase and simplified acquisition; they do not say it about the same buyer.

The practical consequence: a figure you read in a FAR guide is the right figure to look up, but the obligation that binds you as a recipient is the one in your own documented procedures, bounded as 200.320(a)(2)(ii) describes. Source: 2 CFR 200.1 and 2 CFR 200.320(a)(2)(ii), pages 13, 16 and 49 (govinfo PDF).

There is also a boundary written into Part 200 itself. When a non-federal entity is awarded a fixed-price contract or subcontract under the FAR, only subpart A, subpart B except 200.111, 200.112 and 200.113, subpart D at 200.303 and 200.331 through 200.333, and subpart E apply to that contract — and subpart E is not applicable to fixed-price contracts and subcontracts that are not negotiated. The procurement standards of 200.317 through 200.327 are not in that list. Source: 2 CFR 200.101(c), page 19 (govinfo PDF).

Price analysis, and the record that proves the method was chosen

Above the simplified acquisition threshold the method is not the end of the obligation. You must perform a cost or price analysis for every procurement transaction, including contract modifications, in excess of the simplified acquisition threshold, and as a starting point you must make independent estimates before receiving bids or proposals. You must not use the cost plus a percentage of cost method or the percentage of construction costs method of contracting. Source: 2 CFR 200.324, page 52 (govinfo PDF).

And the file is the evidence. You must maintain records sufficient to detail the history of each procurement transaction, and those records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. In an audit, a defensible method with no written rationale behaves like an indefensible one. Source: 2 CFR 200.318(i), page 47 (govinfo PDF).

Two further duties sit alongside the method and are easy to overlook. No employee, officer, agent or board member with a real or apparent conflict of interest may participate in the selection, award or administration of a contract supported by the federal award. And a time-and-materials type contract may be used only after a determination that no other contract is suitable, and only if the contract includes a ceiling price that the contractor exceeds at its own risk. Source: 2 CFR 200.318(c) and (j), pages 46–47 (govinfo PDF).

What this page does not cover

Stated plainly, so you know where to stop relying on it:

• The dollar figures. Part 200 does not state the micro-purchase or simplified acquisition amounts. It points to the FAR at 48 CFR part 2, subpart 2.1, and those figures change independently of this part. The only dollar amount this page quotes from Part 200 is the $50,000 self-certification ceiling for raising a micro-purchase threshold.
• State and tribal procurement codes. For a State or an Indian Tribe, its own policies and procedures govern the method under 200.317. This page cannot tell you what those say.
• FAR contracts. If you hold a FAR contract rather than a federal award, the procurement standards discussed here are not the ones that bind you, as 200.101(c) sets out.
• Agency-specific additions and award terms. Federal agencies implement Part 200 in their own regulations and awards, and the terms and conditions of your award can add requirements this page does not know about.
• The clauses that go into the resulting contract. Choosing a method is separate from what the contract must say; that is Appendix II territory.
• Whether the relationship is a contract at all. If the money is passed on for a public purpose rather than to buy goods or services for yourself, it may be a subaward, and the procurement standards are the wrong chapter.

Frequently asked questions

Do I need three quotes for every purchase under a federal grant?

No. 2 CFR 200.320 never names a number of quotes. For a micro-purchase you may award without soliciting competitive price or rate quotations at all, if you consider the price reasonable and document why. For a simplified acquisition you must obtain price or rate quotations from an adequate number of qualified sources, and unless the federal agency specifies a number you may exercise judgment about what is adequate. The number that matters is the one your own documented procedures set.

Who sets the micro-purchase threshold under 2 CFR 200?

You do. The recipient or subrecipient is responsible for determining and documenting an appropriate micro-purchase threshold based on internal controls, an evaluation of risk and its documented procurement procedures, and the threshold must be authorised or not prohibited under State, local or tribal law. You may self-certify up to $50,000 annually with a justification and supporting documentation; above $50,000 the cognizant agency for indirect costs must approve it.

When can I award a sole-source contract with federal grant money?

Only when one of the circumstances in 2 CFR 200.320(c) applies: the amount does not exceed the micro-purchase threshold, the transaction can only be fulfilled by a single source, a public exigency or emergency will not permit the delay of public notice, you requested a noncompetitive method in writing and the federal agency or pass-through entity approved it in writing, or competition was determined inadequate after soliciting several sources.

What is the difference between sealed bids and proposals?

Sealed bids awards a firm fixed-price contract to the responsible bidder whose conforming bid is lowest in price, and the rule prefers it for construction services. Proposals is used when conditions are not appropriate for sealed bids, may result in a fixed-price or a cost-reimbursement contract, and is awarded to the responsible offeror whose proposal is most advantageous considering price and other factors. Both require public notice.

Does 2 CFR 200 apply to my state agency purchases?

Partly. A State or Indian Tribe must follow the same policies and procedures it uses for procurements with non-federal funds, and only uses 200.318 through 200.327 if it has none. It must still comply with 200.321, 200.322, 200.323 and 200.327. A subrecipient of a State or Indian Tribe does not get that treatment and follows 200.318 through 200.327.

Do I have to do a price analysis as well as run a competition?

Yes, above your simplified acquisition threshold. 2 CFR 200.324 requires a cost or price analysis for every procurement transaction in excess of the simplified acquisition threshold, contract modifications included, and independent estimates before you receive bids or proposals. It also forbids the cost plus a percentage of cost and percentage of construction costs methods of contracting.

Related guides

• 2 CFR Part 200 (Uniform Guidance): what it covers and who it binds
• Which clauses must go into a contract paid with federal grant money?
• Is this a subaward or a contract under 2 CFR 200?
• When can a US agency use simplified acquisition instead of full competition?

Source: 2 CFR Part 200 — Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2025 CFR annual edition, as published at govinfo PDF. Every section cited on this page is taken from that text; the corpus copy used here was fetched on 1 November 2026, and page numbers refer to that PDF. This guide describes 2 CFR Part 200 as revised in 2024 (89 FR 30046, effective 1 October 2024), which is the text in force today. OMB published a proposed rewrite on 29 May 2026 (91 FR 32198, docket OMB-2026-0034); the comment period closed on 13 July 2026. OMB signalled a target effective date of 1 October 2026, but as of 28 September 2026 no final rule had been published in the Federal Register, and the proposal has no legal effect until it is finalised. Checked against the source on 28 September 2026.

Written by Robert Grabarević, founder of Scalebiz. He built the radar as a tool for himself, so that he would not have to re-read the same funding rules for every application. Every guide on this site cites the regulation by section or page, so each claim can be checked against the source. About Scalebiz · Robert on LinkedIn.