Procurement Methods

Introduction

The basis of conducting procurement is fair and open competition. Fair and open competition ensures all potential vendors have the same opportunity to compete on a level playing field for the award. All procurement transactions, regardless of the procurement method or dollar value, shall be conducted in a manner that provides fair and open competition.

Per Title 2, Code of Federal Regulations (CFR), Section 200.319:

• All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and Title 2, CFR, Section 200.320.
• Some examples of restrictive competition include, but are not limited to, placing unreasonable requirements on firms in order for them to qualify to do business; noncompetitive practices between firms; organizational conflicts of interest; unnecessary experience and bonding requirements.
• All program operators must have written procedures that define their internal processes for all procurement transactions and all procurement methods used.

Procurement Methods

Procurement Type	Procurement Method	Federal Regulation
Informal	Micropurchase	2 CFR, Section 200.320(a)(1)
Informal	Small Purchase	2 CFR, Section 200.320(a)(2)
Formal	Sealed Bids	2 CFR Section 200.320(b)(1)
Formal	Proposals	2 CFR, Section 200.320(b)(2)
Other	Noncompetitive Procurement	2 CFR, Section 200.320(c)
Other	Interagency Agreement	2 CFR, Section 200.318(e)

Informal Procurements

Informal Procurement (Micropurchase):

Micropurchase Method Defined:

The procurement method used when the value of the procurement does not exceed the simplified acquisition threshold (the informal procurement threshold) or a lower threshold established by a non-federal entity. The non-federal entity may use the informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. A micropurchase may be used when the total dollar amount of a procurement transaction is at or below the designated threshold.

Micropurchases are not intended to be used to avoid another procurement method (e.g., informal, or formal).

Equitable Distribution: To the maximum extent practicable, the agency should distribute micropurchases equitably among all qualified suppliers (vendors).

Awards: Micropurchases may be awarded without soliciting competitive price or rate quotations if the agency considers the price to be reasonable based on research, experience, purchase history or other information and documents that are maintained accordingly.

Reminder: Federal procurement guidelines require that agencies implement the most restrictive threshold (local, state, federal, or tribal). A threshold may be more restrictive, but it cannot be more permissive.

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Informal Procurement (Small Purchase):

Small Purchase Method Defined:

The acquisition of goods or services, the aggregate dollar amount of which is higher than the micropurchase threshold but does not exceed the simplified acquisition threshold (the informal procurement threshold) or a lower threshold established by a non-federal entity. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.

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Formal Procurements

Formal Procurement (Sealed Bids or Competitive Proposals):

Formal Purchase Method Defined:

When the value of the procurement exceeds the simplified acquisition threshold, or a lower threshold established by the non-federal entity, formal procurement methods are required. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with 2 CFR, Section 200.319(c). The formal purchase procurement includes both sealed bids and competitive proposals.

Sealed Bids (Invitation for Bid) Defined:

Sealed bids are often referred to as an Invitation for Bid (IFB). This procurement method uses publicly solicited bids and a firm fixed-price contract (lump sum or unit price) awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest price.

Sealed bids must meet the following requirements:

• Sealed bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids; for local, and tribal governments, the invitation for bids must be publicly advertised.
• The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond.
• All sealed bids will be opened at the time and place prescribed in the invitation for bids, and for local and the tribal governments, the sealed bids must be opened publicly.
• A firm fixed price contract award will be made in writing to the lowest priced responsive and responsible bidder.
• Any or all bids may be rejected if there is a sound and documented reason.

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Competitive Proposals (Request for Proposal) Defined:

Competitive proposals are often referred to as a Request for Proposal (RFP). A procurement method in which either a fixed-price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids.

Competitive Proposals are awarded in accordance with the following requirements:

• Proposals must be publicized and identify all evaluation factors and their relative importance.
• Proposals must be solicited from an adequate number of qualified sources. Any response to publicized RFPs must be considered to the maximum extent practical.
• The non-federal entity must have a written method for conducting technical evaluations of the proposals received and making selections.
• Contracts must be awarded to the most responsive and responsible offeror whose proposal is most advantageous to the non-federal entity, with price and other factors taken into consideration. Note: Price must be weighted the heaviest with other evaluation criteria taken into consideration.

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Other Procurements

Noncompetitive Procurement (Noncompetitive Negotiation or Sole Source Procurement):

Noncompetitive Procurement Method Defined:

There are specific circumstances in which noncompetitive procurements can be used.

Noncompetitive procurement can only be awarded if one or more the following circumstances exists:

• The acquisition of goods or services, the aggregate dollar amount of which does not exceed the micropurchase threshold.
• The item is available only from a single source.
• The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation.
• The federal awarding agency (overseeing state agency) or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-federal entity. Requires prior approval from the overseeing state agency.
• Or, after solicitation of a number of sources, competition is determined inadequate.

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Intergovernmental (Interagency Agreement):

Intergovernmental (Interagency) Procurement Method Defined:

To foster greater economy and efficiency, and in accordance with efforts to promote cost-effective use of shared services, the non-federal entity may enter into state and local intergovernmental agreements or inter-agency agreements where appropriate for procurement or use of common or shared goods and services. Competition requirements will be met with documented procurement actions using strategic sourcing, shared services, and other similar procurement arrangements.

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