If your nonprofit receives federal funding, you need to be aware of the latest adjustments to the Federal Acquisition Regulation’s (FAR) acquisition-related thresholds. FAR’s inflation adjustments, the latest of which became active on October 1, 2025, are required by law every five years. They provide nonprofits with an opportunity to review the procurement methods they use when purchasing property or services required for federally funded projects. Here’s what you need to know about the five thresholds.
1. Micro-purchases
The micro-purchase threshold (MPT) is available for acquisitions that don’t exceed a current threshold of $15,000. Organizations can award these purchases without soliciting competitive price or rate quotations if they consider a price reasonable based on research, experience, purchase history and other information. However, you should maintain documents to support your conclusions. To the extent practicable, award micro-purchases equitably among qualified suppliers.
In some circumstances, your nonprofit may be able to apply a higher MPT. But final approval will depend on the federal agency and the actual purchase amount.
2. Small purchases
For purchases greater than the MPT but less than that of the $350,000 simplified acquisition threshold (SAT), recipients must obtain price or rate quotes from an “adequate number” of sources. Your organization can generally exercise its judgment in determining what constitutes an adequate number.
You may opt for a lower SAT than that under FAR. Your nonprofit is responsible for determining an appropriate SAT based on internal controls, risk and your organization’s documented procurement procedures (see, “Items to include in your written procurement procedures” at x). Note that to take advantage of recent increases to the SAT and MPT, you must revise your procurement policies accordingly. Until you do so, acquisitions will remain subject to the previous thresholds.
3. Sealed bid
The sealed bid method for purchases that exceed the SAT is feasible when:
- You have a complete, adequate and realistic specification or purchase description,
- Two or more responsible bidders are willing and able to compete effectively for the business, and
- Your procurement is suitable for a fixed-price contract, and you can select the winning bidder based primarily on price.
Your nonprofit must publicly solicit these bids. You must also award a fixed-price contract (lump sum or unit price) to the vendor whose bid is the lowest and that satisfies all material terms and conditions. Additional requirements apply, and you must document a justification for all bids you reject. This method is usually preferred for construction contracts.
4. Proposal
Proposals are also applicable to purchases that exceed the SAT and are used when sealed bids aren’t appropriate. They can result in either fixed-price or cost-reimbursement contracts.
Requests for proposals require public notice. They must identify all evaluation factors and their relative importance, and your organization must have written procedures for evaluation and selection. You must solicit proposals from multiple qualified entities and, as much as practicable, consider all submitted proposals. Award contracts to the entity that proposes the best price and other advantageous factors.
5. Noncompetitive
Your nonprofit can employ noncompetitive procurement methods if the:
- Total amount of the transaction doesn’t exceed the MPT,
- Transaction can be fulfilled only by a single source,
- Procurement represents a public exigency or emergency that can’t wait for the process of soliciting competitive proposals, or
- Noncompetitive method is requested in writing and the respective agency or pass-through entity provides written approval.
Noncompetitive methods are also permitted if, after soliciting multiple sources, you decide that competition is inadequate.
Don’t risk it
Noncompliance with federally mandated procurement methods can prove costly. Potential penalties range from temporary withholding of payments and disallowed payments to suspension or termination of the award and withholding of new awards or continuation funding. If you have questions about the proper method to use — or how to apply it — we can help.
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