Micro-Purchase Threshold (MPT) vs. the Simplified Acquisition Threshold (SAT)
Government | 6 Min Read
A threshold, simply put, is a ceiling or limit and when it’s exceeded, triggers an action. Through the government contracting lens, a threshold is the figurative ceiling placed on the total cost to purchase supplies and services, including construction as well as research and development.
If the total cost of a purchase is below the ceiling, no additional action is required to issue a purchase order. However, if the total cost of a purchase reaches or exceeds the limit, the government buyer must follow additional streamlined acquisition processes before and after issuing the purchase order. So what does all this mean for GSA Schedule contractors?
As a GSA contractor, you will need to be familiar with the terms Micro-Purchase Threshold (MPT) and Simplified Acquisition Threshold (SAT). You can read all about these two terms in the Federal Acquisition Regulation, but as with any government document, it’s not always easy to follow.
The MPT and the SAT were established to address and reduce the administrative costs associated with a lengthy bid review and response process, safeguarding fair allocation of government contracting funds. Let’s review the MPT vs. the SAT and why you should keep your eyes on any changes.
What is the Micro-Purchase Threshold (MPT)?
We like to view the Micro-Purchase Threshold as the federal government’s “smallest limit” set on purchases of commercial goods and services that do not require a competitive quotation process. Micro-Purchases can be made directly with the contractor if the Contracting Officer or appointed federal buyer considers the pricing to be reasonable.
For orders under the MPT, currently set at $10,000, authorized buying agencies can purchase directly from the contractor without adhering to the more formal competitive processes. A government purchase under $20,000 can be executed in a quick phone, email, or through GSA Advantage!. When a contract reaches or exceeds the MPT threshold, the authorized buying agency must abide by streamlined acquisition procedures. For more detail on ordering procedure language, you can check out Subpart 13.2 - Actions at or Below the Micro-Purchase Threshold.
Using Government Purchase Cards (GPCs) for Micro-Purchases
Authorized government buyers make Micro-Purchases directly from companies using their government credit card. The Government Purchase Card (GPC) is the government’s version of a commercial credit card and it's issued to authorized government agency personnel for services and supplies.
All GSA Schedule contractors are required to accept the GPC for purchases up to the Micro-Purchase Threshold. This makes it significantly easier for government agencies to quickly and efficiently acquire solutions that satisfy their needs. The use of a GPC to make purchases under the MPT is highly encouraged by the U.S. government to its employees.
Most purchase card orders will be under the Micro-Purchase level, however, some purchase card holders may have a spending limit above the MPT, so contractors are highly encouraged to accept GPC orders greater than the MPT as well.
What is the Simplified Acquisition Threshold (SAT)?
The Simplified Acquisition Threshold (SAT) has also experienced a recent increase from $150,000 to $250,000 in an effort to provide relief for the COVID-19 pandemic. Much like the MPT, the SAT is established to streamline the government procurement process, however, purchases between the MPT and the SAT have additional elements in place that purchasing under the MPT do not.
For purchases between the MPT and the SAT (between $10,000 and $250,000), authorized government buyers need to follow the Simplified Acquisition Procedures (SAP) and show reasonable consideration for supplies and services offered. Government buyers must:
- Perform market research for a minimum of 3 contractors that may fulfill their desired need through the GSA Advantage! website, OR
- Review at least 3 contractor price lists found in eLibrary, OR
- Request quotations for at least 3 GSA Schedule contractors
In addition, government agencies must place the order with the contractor who can offer the "best value" determination. Once the government buyer determines the contractor with the “best value” option, the award is granted. Best value considerations are not always based on lowest costs factors, but they allow the government flexibility to consider other aspects beyond both price and the highest technical rating. If a contractor offers higher prices, those prices may be justified by other factors or tradeoffs the contractor presents.
It's important to note that contracts and subcontracts at or below the SAT ($250,000 or less) are not applicable to certain laws and regulatory requirements. FAR 13.005 provides a list of inapplicable laws to contracts at or below the SAT.
Contract Actions Exceeding the MPT and SAT
For any contract above the SAT (greater than $250,000), a Request for Quote (RFQ) must be posted on GSA eBuy or government buyers must send the RFQ to as many contractors as practicable. Subpart 13.5 of the electronic code of Federal Regulations provides special authority for acquisitions of commercial supplies and services in amounts exceeding the Simplified Acquisition Threshold but not exceeding $7.5 million.
We know this is a lot to process, so we created a graphic that might help you visualize the MPT and SAT and the ordering procedures for each threshold:
Changes to the MPT and SAT
Changes to the Micro-Purchase Threshold and the Simplified Acquisition Threshold such as the increases implemented during the pandemic essentially means more contract awards. These changes affect both government buyers and contractors and are put in place to make the federal marketplace more efficient in times of crisis.
The awards at or below the MPT can be placed directly through a GSA Schedule contract without the need to solicit and evaluate competitive quotations. This reduces contractors' bid and proposal submission efforts and any associated costs.
Awards at or below the SAT ($250,000 or below) are given without the extended provisions and special documentation requirements prescribed for awards above the SAT.
Benefits of the MPT and SAT
It’s easy to see the many benefits of increased MPT and SAT from both the government and contractor perspective. The government buyer has more spend flexibility when placing orders under pre-existing contract vehicles such as the GSA Schedule. They also have their immediate needs fulfilled in a more cost effective and timely manner. With the MPT and SAT, Government Purchase Card funds are better managed as purchasing from pre-existing contract vehicles vs. open market (or commercially available business) typically provides better rates.
Contractors, whether small or large businesses, have increased opportunity to grow in revenue and broaden their customer base. The MPT and SAT lead to increase in award opportunities, lowered administrative costs, and less bidding and proposal writing efforts.
Do You Have Questions About the MPT or SAT and How They Affect Your GSA Schedule?
Although these terms are essential to understand if you're a government contractor, we know the stipulations and changes that come with them can be hard to follow. It's important you keep up with the MPT and SAT in case the government decides to alter the thresholds in the future.
Do you still have questions about Micro-Purchase Threshold or the Simplified Acquisition Threshold and what they mean for your GSA MAS contract? We can help answer any questions you may have. If you want to learn more about the world of GSA and stay up to date with the latest contracting news, you can subscribe to our blog and our monthly newsletter.