HomeMy WebLinkAbout6.h. Federal Micro-Purchase Threshold
EXECUTIVE SUMMARY
City Council Regular Meeting: January 31, 2022
AGENDA ITEM: Federal Micro-Purchase Threshold AGENDA SECTION:
Consent
PREPARED BY: Teah Malecha, Finance Director AGENDA NO. 6.h.
ATTACHMENTS: Resolution APPROVED BY: LJM
RECOMMENDED ACTION: Motion to approve the Resolution Increasing the Federal
Micro-Purchase Threshold to $25,000.
BACKGROUND
The City implemented the Policies and Procedures for Federal Awards Administration in September 2021
which is required when receiving Federal funds such as CARES or ARPA. The policy outlines
procurement requirements to be followed:
1. Formal procurement, such as sealed bids, is required for items at or exceeding $175,000.
2. Small purchases include items that are at the micro-purchase threshold up to $175,000. Quotes are
required from an adequate number of qualified sources.
3. Micro-purchases are typically $10,000 or less and can purchased without soliciting bids or quotes if
the City considers it to be reasonable based on research, experience, or history.
The micro-purchase method simplifies the acquisition process by expediting the lowest-dollar small
purchases and minimizing the administrative burden and cost. Under Federal Acquisition Regulations, the
City can increase their micro-purchase threshold up to $50,000. To line up with the City’s Purchasing
Policy and Minnesota Statute, it is recommended to increase the micro-purchase threshold from $10,000
to $25,000. This only applies to procurement requirements under a Federal award. The internal controls
for approvals would remain the same:
1. For amounts over $50,000, approval is required by the City Administrator and the City Council
before the purchases are made, except as listed in item 2.
2. For amounts over $50,000 that fall into any of the following categories; the payment of
judgements, salaries and wages previously fixed by the Council or by statute, principle and interest
on obligations, rent or other fixed charges, the exact amount of which has been previously
determined by contract authorized by the Council, approval is required by the City Administrator.
3. For amounts from $15,000 - $50,000, approval by the Department Head and City Administrator is
required.
4. For amounts under $15,000, approval by the Department Head is required.
The increase to the micro-purchase threshold must be adopted annually by the City Council.
RECOMMENDATION
Staff recommends approval of the Resolution Increasing the Federal Micro-Purchase Threshold to
$25,000.
CITY OF ROSEMOUNT
DAKOTA COUNTY, MINNESOTA
RESOLUTION 2022 - 10
A RESOLUTION INCREASING THE FEDERAL MICRO-PURCHASE
THRESHOLD TO $25,000
WHEREAS, a City entering into an agreement for the sale or purchase of supplies, materials,
equipment or the rental thereof, or the construction, alteration, repair or maintenance of real
or personal property must abide by the Minnesota statutes relating to contracting and bidding.
Minn. Stat. § 471.345, the Uniform Municipal Contracting Law, was established to provide dollar limits for all municipalities upon contracts which shall or may be entered into on the basis of competitive bids, quotations, or purchase or sale in the open market. Minn. Stat. § 471.345. Generally, the following thresholds apply: 1. For contracts over $175,000 – sealed bids, solicited by public notice and subject to the particular requirements of the governmental subdivision. 2. For contracts from $25,000 to $175,000 – sealed bids or direct negotiation, with two quotations whenever possible. 3. For contracts of $25,000 or less – open market or quotations (with at least two contract quotations, if practicable).
WHEREAS, the City must have and use documented procurement procedures, consistent
with State, local, and tribal laws and regulations and the standards of this 2 CFR § 200.318, for
the acquisition of property or services required under a Federal award or subaward; and
WHEREAS, 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 2 CFR § 200.319 and 2 CFR § 200.320.
2 CFR § 200.320 Methods of Procurement to be followed:
1. For contracts over the Simplified Acquisition Threshold, generally defined as $250,000 in the Federal Acquisition Regulations (FAR) – formal procurement methods such as sealed bids or proposals are appropriate. 2. For contracts determined to be “small purchases”, that is the aggregate dollar amount of which is higher than the micro-purchase threshold and smaller than the Simplified Acquisition Threshold, price or rate quotations must be obtained from an adequate number of qualified sources. 3. For contracts determined to be “Micro-purchases”, currently defined in the Federal Acquisition Regulations (FAR) as $10,000 or less– Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity.
WHEREAS, 2 CFR 200.320 (a)(1)(iv) allows for the City to increase their micro-purchase threshold up to $50,000. Non-Federal entities may establish a threshold higher than the micro-purchase threshold identified in the FAR in accordance with the requirements of this section. The City may self-certify a threshold up to $50,000 on an annual basis and must maintain documentation to be made available to the Federal awarding agency and auditors in accordance with 2 CFR § 200.334. The self-certification must include a justification, clear identification of the threshold, and supporting documentation of a higher threshold consistent with State law.
THEREFORE, BE IT RESOLVED that the City Council of the City of Rosemount,
hereby approves an increase to the City of Rosemount’s federal Micro-purchase threshold of
$10,000 to $25,000 to be consistent with Minnesota Stat. § 471.345, subd. 5, as allowed by 2
CFR § 200.320(a)(1)(iv), for the acquisition of property or services under a Federal award.
ADOPTED this 31st day of January, 2022, by the City Council of the City of Rosemount.
William H. Droste, Mayor
ATTEST:
Erin Fasbender, City Clerk