Arkansas Department of Education Micro-purchase Procurement Method in Child Nutrition Programs, Updated

Memo Information

Memo Number
CNU-17-018
Memo Date
9/29/2016
Memo Type
Administrative
Section
Child Nutrition
Regulatory Authority
2 CFR 200.320(a); 2 CFR 200.67
Response Required
NO
Attention
Superintendents; Principals

Contact Information

Memo Text

ATTENTION: CO-OP DIRECTORS AND CHILD NUTRITION DIRECTORS 

 

The purpose of this memo is to provide clarification on the micro-purchase threshold, aggregate costs, and how to effectively use these tools in your Child Nutrition Programs.  Please note, the only change from Commissioner’s Memo CNU-16-006 to this memo is an increase in dollar threshold from $3,000 to $3,500 for micro-purchases.

 

Procurement by micro-purchase is the acquisition of supplies or services not exceeding $3,500 and may be awarded without soliciting competitive quotations if the price is reasonable.  Costs should be necessary and reasonable, and the Buy American provision is still in effect.

 

An aggregate award is the process of awarding a contract by categories or like items for a specific period of time.

 

The aggregate cost for the Federal micro-purchase threshold is $3,500 per procurement transaction, whether weekly, monthly, or annually.  The purpose of the micro-purchase is to expedite the completion of its lowest-dollar small purchase transactions and minimize the associated administrative burden and cost.

 

Aggregate costs MAY BE determined over a weekly or monthly basis.  It does NOT HAVE TO BE the total cost over the program year, but MAY be calculated that way.

 

For example: a small school food authority (SFA) is making purchases for food at local grocery stores and does not have adequate storage (insufficient storage space is a good example of when an SFA would use the micro-purchase).  The total cost per week is well under $3,500.  The SFA could apply the micro-purchase threshold.  The SFA would not have to consider total food purchases over the entire program year.

 

Another example: an SFA wants to procure fresh produce on a monthly basis due to fluctuating prices in the produce market.  When determining the threshold to use in the procurement process, the SFA would consider the aggregate cost of each monthly purchase and NOT the aggregate cost over the program year.

 

A third example: an SFA’s dishwasher breaks mid-week.  The repairs will cost less than $3,500.  Due to the need for immediate repairs, a repair company may be contacted and the micro-purchase threshold applied.  The SFA would not have to aggregate total repair costs with this particular company for the program year.

 

To effectively implement the micro-purchase threshold, SFAs should:

  • Maximize purchasing during a single transaction. 
  • NOT deliberately buy smaller quantities to stay under the micro-purchase threshold of $3,500.  If the State agency reviewed the purchases and evaluated those purchases to be intentionally broken-up to fall under the micro-purchase threshold, the purchases would not be allowable. 
  • Avoid choosing the same vendor/supplier for each purchase, to the maximum extent practicable.  The goal of effective procurement is to “spread the wealth” and enable competition.

For districts in remote areas of the state that may have access to only one vendor/supplier, the SFA should keep documentation showing there to be only one available vendor/supplier and traveling to an outside vendor/supplier would not be cost effective.

 

NOTE: the most restrictive micro-purchase threshold applies (Federal, State, or local).  Be sure to check your local policies.

 

For an overview of how the micro-purchase threshold fits into the over-all procurement process, see the link below to the handout USDA Decision Tree: How Will You Bring Local Foods into the Cafeteria with Your Next School Food Purchase? 

 

http://www.fns.usda.gov/sites/default/files/f2s/Local_Procurement_Decision_Tree.pdf

 

The Decision Tree is designed for local procurement, but the visual and procurement principles can be applied to any food purchase.

 

According to the Decision Tree, you essentially have two options for procurement:  informal and formal.  These are the basis for all food purchases and are the “norm” for handling procurement.  Notice how the micro-purchase threshold is listed separately with no arrows connecting it to the normal flow of procurement.  This visual illustrates that the micro-purchase threshold is not a “normal” way of doing business, but is a “tool” or “tip” for managing procurement.


 

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