Federal Government Increases Micro-purchase and Simplified Acquisition Thresholds to Support COVID-19 Response Efforts
Due to the current COVID-19 pandemic, GSA and the agencies procuring through GSA Schedules are adapting to the needs of American citizens. An increase in purchasing through the Schedules program has brought along a slew of revisions to procedures and procurement efforts. Normally we discuss contracting from the vendor perspective, however, it is important to understand changes on the procurement side in order to gauge contracting activity and efforts to prepare for potential contracting opportunities and partnerships. From a buyer’s perspective, one of the most significant changes by way of the pandemic is an update to both the Micro-Purchase (MPT) and Simplified Acquisition (SAT) Thresholds.
The Novel Coronavirus Disease (COVID-19) has created an environment where needs for products and services such as PPE, disinfectants, lab equipment, professional services, IT software, and more have skyrocketed. In order to allow buyers to more easily meet those needs, the federal government signed into effect a memorandum for all GSA contracting activities and heads of contracting activity on March 14, 2020 which temporarily raises the MPT and SAT. These changes will allow buyers to more efficiently obtain relevant supplies and services to combat the virus. Due to the declaration of a pandemic by the World Health Organization (WHO) on March 11 and declaration of emergency by the President on March 13, GSA is planning to play an instrumental role in operations related to response. According to the memo, the changes, which are in effect through July 1, 2020 (unless further modified) are as follows:
“The micropurchase threshold is increased to:
$20,000 in the case of any contract to be awarded and performed, or purchase to be made, inside the united states, including the acquisition of leasehold interests in real property; and $30,000 in the case of any contract to be awarded and performed, or purchase to be made, outside the United States, including the acquisition of leasehold interests in real property”
The simplified acquisition threshold (SAT) is increased to:
$750,000 or any contract to be awarded and performed, or purchase to be made, inside the United States, including the acquisition of leasehold interests in real property; and $1.5 million for any contract to be awarded and performed, or purchase to be made, outside the United States, including the acquisition of leasehold interests in real property.
The threshold for simplified procedures for certain commercial items, including the acquisition of leasehold interests in real property, is increased to $13 million (see FAR 13.500(c) and 18.202(d)).”
As a GSA contractor, you may be asking questions like: What does this all mean? What is MPT in the first place? What do they mean by “simplified” acquisition? If you're left scratching your head after reading the attached memo, we've got you covered with information about how this memo could potentially alter your company’s GSA Schedule contract.
What is the Micropurchase Threshold?
“Micro” purchases aren’t exactly what some would consider micro; $20,000 is a pretty big chunk of change, but when put into perspective of the government’s ability to contract, it’s on the smaller side. The MPT makes it easier for government buyers to procure supplies and services to fit their current needs. For purchases under the designated threshold, the government Purchase Card holder (essentially government credit cards) are able to place orders directly with contractors through either email, phone, or GSA Advantage. This makes it significantly easier for government agencies that are eligible to purchase through the GSA MAS program to more quickly and efficiently acquire supplies and services to satisfy their needs, especially current needs related to supporting the effort against COVID-19. Prior to this most recent temporary change, the MPT was $10,000 which makes this a pretty sizable change.
What is the Simplified Acquisition Threshold?
The Simplified Acquisition Threshold (SAT) is meant to streamline the government’s ability for procurements similarly to the MPT. However, the SAT does have specific qualities other than just the dollar amount that separate it from the MPT. While the large majority of orders that will be processed using government purchase cards will be under the MPT, government buyers may have spending ability with those cards above the MPT as well. FAR Subpart 13.301 actually denotes that “Agency procedures should not limit the use of the Governmentwide commercial purchase card to micro-purchases.”
For purchases between the MPT and the SAT, buying agencies are able to utilize the below streamlined ordering procedures to let them reasonably consider information about the supply or service offered under MAS contracts:
- Survey of at least 3 schedule contractors within the scope of the purchase through the GSA Advantage website, or
- Review the price lists of at least 3 schedule contractors, or
- Request quotations from at least 3 schedule contractors, and
- Place the order with the schedule contractor that can provide the need to be contracted that falls under the scope of the “best value” determination
One point that is always important to consider is that “best value” does not always mean lowest price per unit. All factors of value are considered, including (but not limited to) delivery term, warranty, prompt payment discount, quantity discount, etc.
Preparing for Simplified Acquisition and Potential Micropurchases
In a time of crisis or pandemic, government buyers and Purchase Card holders are going to be looking for ways to potentially streamline their acquisition process to meet urgent needs. As a GSA MAS contractor, it is imperative to understand what that means on the fulfillment side. So, how can you prepare for potential direct purchases below the MPT or rapid-paced procurement under the SAT? Follow these tips from our Consulting Team:
- Make sure your GSA price list and catalog on GSA Advantage are up to date and reflective of current pricing
- Check your GSA Purchase Order (PO) Portal login for potential direct orders
- Ensure the contact information for ordering is current and any old POC is replaced with the current contact
Still have questions about purchasing thresholds and what they mean for your GSA MAS Contract? Contact Winvale and subscribe to our weekly blog series to stay up to date with the latest contracting news! For more COVID-19 resources for government contractors, check out our new Coronavirus resource library.