If your organization receives federal grants and purchases goods or services with those funds, you need a written procurement policy. Not a suggestion — a regulatory requirement under 2 CFR 200.318. Without one, every procurement you make is a potential audit finding.
This article explains what your procurement policy must include, how it maps to the Uniform Guidance, and how to build one that satisfies auditors — not just checks a box.
Why You Need a Written Procurement Policy
Procurement findings account for over 30% of all questioned costs in federal Single Audits, according to Federal Audit Clearinghouse data. The most common finding? No documented procurement procedures.
Under 2 CFR 200.318(a), non-federal entities must use their own documented procurement procedures that reflect applicable state, local, and tribal laws and regulations — provided they also conform to the federal standards in 2 CFR 200.318 through 200.327.
Translation: you cannot rely on “we follow state procurement rules” as your entire policy. Your procedures must explicitly address the federal requirements layered on top of whatever state rules apply to your entity type.
What Your Procurement Policy Must Cover
A compliant procurement policy under 2 CFR Part 200 must address all of the following areas. Each maps to a specific regulatory section that auditors will test against.
1. Procurement Methods and Thresholds
Regulatory basis: 2 CFR 200.320
Your policy must define which procurement method applies at each dollar threshold:
- Micro-purchases (up to $10,000): May be awarded without competitive quotations if price is reasonable. Your policy should state how reasonableness is determined.
- Small purchases ($10,001 to $250,000): Price or rate quotations must be obtained from an adequate number of qualified sources (minimum two).
- Sealed bids / Competitive proposals (above $250,000): Formal solicitation with documented evaluation criteria.
- Noncompetitive proposals (sole source): Only permitted under specific conditions (200.320(c)) with written justification.
Key detail: The micro-purchase threshold increased to $10,000 and the simplified acquisition threshold increased to $250,000 as part of the 2024 Uniform Guidance revision, effective October 1, 2024. If your policy still references $3,500 or $150,000, it is out of date.
2. Competition Requirements
Regulatory basis: 2 CFR 200.319
All procurement transactions must be conducted in a manner that provides full and open competition. Your policy must prohibit:
- Placing unreasonable requirements on firms to qualify to do business
- Requiring unnecessary experience or excessive bonding
- Noncompetitive pricing practices between firms or affiliated companies
- Organizational conflicts of interest
- Specifying only a brand name product without allowing “or equal”
- Any arbitrary action in the procurement process
3. Conflict of Interest Standards
Regulatory basis: 2 CFR 200.318(c)(1)
Your policy must include standards of conduct covering conflicts of interest for employees engaged in the selection, award, and administration of contracts. At minimum:
- No employee, officer, or agent may participate in procurement decisions where they have a real or apparent conflict of interest
- Conflicts include financial or other interest in the firm selected for award
- Organizational conflicts must also be addressed
- Disciplinary actions for violations must be specified
4. Contract Clauses (Appendix II)
Regulatory basis: 2 CFR 200.327 and Appendix II to Part 200
All contracts made with federal funds must contain the applicable provisions described in Appendix II. Your policy should reference this requirement and include a checklist of clauses to include, such as:
- Equal Employment Opportunity (contracts above $10,000)
- Davis-Bacon Act (construction contracts above $2,000)
- Rights to Inventions (if applicable)
- Clean Air Act and Federal Water Pollution Control Act (contracts above $150,000)
- Debarment and Suspension (all contracts)
- Byrd Anti-Lobbying Amendment (contracts above $100,000)
5. Suspension and Debarment Verification
Regulatory basis: 2 CFR 200.214 and 2 CFR Part 180
Before awarding any contract with federal funds, you must verify that the vendor is not excluded or disqualified. Your policy must require:
- SAM.gov exclusion check before every contract award
- Documentation of the check (screenshot, printout, or log entry with date)
- Annual re-verification for multi-year contracts
Contracting with a debarred entity can result in the entire contract amount being questioned as a disallowed cost.
6. Sole-Source Justification Procedures
Regulatory basis: 2 CFR 200.320(c)
Noncompetitive procurement is only permitted when one of four conditions is met:
- The aggregate dollar amount does not exceed the micro-purchase threshold
- The item is available only from a single source
- A public emergency exists that will not permit competitive solicitation
- The federal awarding agency expressly authorizes noncompetitive proposals
Your policy must require a written justification memo for every sole-source procurement documenting which condition applies and why competitive methods were not feasible.
7. Documentation and Record Retention
Regulatory basis: 2 CFR 200.318(i) and 200.334
Your policy must specify what documentation is maintained for each procurement. At minimum, the procurement file should contain:
- Basis for the procurement method selected
- Basis for the contract type selected
- Basis for the contractor selection or rejection
- Evidence of price or cost analysis (or price reasonableness determination for micro-purchases)
- SAM.gov verification record
- Conflict of interest disclosure
- The executed contract with all required clauses
Records must be retained for 3 years from the date of submission of the final expenditure report (2 CFR 200.334).
Common Mistakes in Procurement Policies
Based on common Single Audit findings, these are the procurement policy gaps that most frequently trigger questioned costs:
- Outdated thresholds — Still referencing $3,500 micro-purchase or $150,000 simplified acquisition from pre-2024 rules
- Missing sole-source procedures — Policy mentions competition but has no documented process for when competition is not feasible
- No SAM.gov verification requirement — Policy does not mention debarment checks at all
- Generic conflict of interest language — Policy says “employees should avoid conflicts” without defining what constitutes a conflict or requiring annual disclosures
- No Appendix II clause checklist — Contracts are executed without the required federal provisions
- No file documentation standard — Procurement decisions are made but the rationale is not recorded in the file
How to Get Started
If your organization does not have a written procurement policy — or has one that has not been updated since the 2024 Uniform Guidance revision — start here:
- Take the free Grant Readiness Assessment at app.jsgrantconsulting.com/assessment to identify your specific procurement gaps
- Review your current procurement files against the documentation checklist above — if any of the 7 items are missing, you have an immediate vulnerability
- Update your thresholds to reflect the 2024 revision ($10,000 micro-purchase, $250,000 simplified acquisition, 15% de minimis)
- Add the missing sections — sole-source justification procedures and Appendix II clause requirements are the most commonly absent
JS Grants & Compliance Consulting provides a customizable procurement policy template as part of the full diagnostic report, along with a sole-source justification form and SAM.gov verification log — all mapped to the specific 2 CFR Part 200 requirements your organization needs to address.
