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
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
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
To effectively implement the micro-purchase
threshold, SFAs should:
- Maximize purchasing during a single
- 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
- 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.
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
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?
The Decision Tree is designed for local
procurement, but the visual and procurement principles can be applied to any
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.