2 CFR 200.320 Procurement Methods: Informal, Formal and Noncompetitive

The file question that starts after the award

A finance manager at a grant-funded nonprofit is preparing for a funder monitoring visit. The monitor opens the procurement file for a data-system contract and asks a simple question: why was this bought through proposals rather than quotes? The manager finds the RFP, three proposals and a signed contract. What is missing is a single page saying which method was chosen, which threshold applied, and under which version of the rule.

That gap is common, and it is rarely about the decision itself. The method was probably reasonable. The file simply does not show it. Under 2 CFR 200.318(i), records must be detailed enough to show the history of each procurement, including the rationale for the procurement method.

This article walks through the methods in 2 CFR 200.320, the thresholds that trigger them, and what to write down when you choose one. After reading, you should be able to put a dated method rationale in each procurement file.

What 2 CFR 200.320 procurement methods cover

2 CFR 200.320 sets out three types of procurement method: informal, formal and noncompetitive. Informal covers micro-purchases and simplified acquisitions. Formal covers sealed bids and proposals. Noncompetitive covers a short list of circumstances in which competition is not required.

Which sections apply depends on who you are. Under 2 CFR 200.317, a State or Indian Tribe follows the same policies and procedures it uses for purchases with its own funds, and must also comply with 200.321, 200.322, 200.323 and 200.327. All other recipients and subrecipients, including nonprofits, school districts, local governments and subrecipients of a State, must follow 200.318 through 200.327.

OMB published a substantial revision of the Uniform Guidance on April 22, 2024 (89 FR 30046), effective October 1, 2024. Federal agencies could elect to apply it to awards issued before that date, but were not required to, so the version that governs a given award depends on its terms. The revision also uses "simplified acquisitions" for the informal method above the micro-purchase threshold and up to the simplified acquisition threshold, in place of the older "small purchase" procedures. If your written policy still describes "small purchase procedures," it may predate the revision.

Method choice stays with the issuer. The regulation describes the methods and conditions. Your organization decides which one fits the purchase, and your file should say why.

Informal methods: micro-purchases and simplified acquisition

Micro-purchases

A micro-purchase is the lightest method. The definition of the micro-purchase threshold comes from 2 CFR 200.1, which points to the FAR at 48 CFR part 2, subpart 2.1. The FAR figure rose from $10,000 to $15,000, effective October 1, 2025 (FAR Case 2024-001, 90 FR 41872, August 27, 2025). Ask your awarding agency or pass-through entity which figure applies to your award, and update your written procedures to match.

Micro-purchases may be awarded without soliciting competitive price or rate quotations if the entity considers the price reasonable, based on research, experience, purchase history or other information, and "maintains documents to support its conclusion" (2 CFR 200.320(a)(1)(ii)). The documentation is the point. "We considered the price reasonable" is not a record. A short note naming what you compared and when is.

An entity may also set a higher threshold. Under 2 CFR 200.320(a)(1)(iv), it may self-certify a threshold of up to $50,000 on an annual basis, with a justification and supporting documentation kept available to the awarding agency or pass-through entity and auditors. Under 200.320(a)(1)(v), a threshold above $50,000 needs approval from the cognizant agency for indirect costs. Self-certification is a policy decision with its own paper trail, so treat it as such.

A local or state threshold may be lower than the federal one. When both apply, the stricter rule governs. Confirm how a change applies to your specific award with the awarding agency or pass-through entity. For more on this threshold, see the micro-purchase threshold at $15,000.

Simplified acquisition

Simplified acquisition sits between the micro-purchase threshold and the simplified acquisition threshold (SAT). The FAR SAT rose from $250,000 to $350,000, effective October 1, 2025 (FAR Case 2024-001, 90 FR 41872).

The entity sets its own SAT based on internal controls, risk and documented procedures. It "may be lower than, but must not exceed, the threshold established in the FAR" (2 CFR 200.320(a)(2)(ii)). So the federal number is a ceiling, not a default. If your policy adopted $350,000 without a risk discussion, that choice is worth revisiting.

Informal does not mean undocumented. Under 2 CFR 200.320(a)(2)(i), price or rate quotations must come from "an adequate number of qualified sources." The federal rule sets no fixed number such as three; unless the federal agency specifies one, the entity uses its judgment, and state or local rules may set a minimum. Record the quotes you sought, who you asked, what came back and why you picked the winner. The simplified acquisition threshold at $350,000 covers the mechanics in more detail.

Above the SAT, 2 CFR 200.324(a) requires a cost or price analysis for every procurement transaction, including contract modifications, and, as a starting point, independent estimates must be made before receiving bids or proposals. The regulation does not say who must prepare the estimate. What the file needs to show is that it was made before any prices were seen, and what it was based on.

Formal methods: sealed bids and proposals

Formal methods apply when the purchase is large enough or complex enough to call for public competition. The two methods answer different questions.

Sealed bids

Under 2 CFR 200.320(b)(1), sealed bids are publicly solicited, and a firm fixed-price contract goes to the responsible bidder whose conforming bid is lowest in price. Sealed bids are "preferred for procuring construction services." When the invitation for bids specifies factors such as discounts, transportation cost and life-cycle costs, they must be considered in deciding which bid is lowest (2 CFR 200.320(b)(1)(ii)(D)).

Sealed bids fit when the requirement is well defined and price is the differentiator. The evaluation is mostly a responsiveness check followed by a price comparison.

Proposals

Proposals fit when you need to weigh quality against price. Under 2 CFR 200.320(b)(2)(i), RFPs require public notice and must identify every evaluation factor and its relative importance. Proposals must be solicited from multiple qualified entities.

Two further requirements shape the file. First, an entity using the proposals method must have written procedures for conducting technical evaluations and making selections (2 CFR 200.320(b)(2)(ii)). Second, the award goes to "the responsible offeror whose proposal is most advantageous to the recipient or subrecipient considering price and other factors" (2 CFR 200.320(b)(2)(iii)).

For a proposals procurement, the file should show weights and rating definitions fixed before scoring, independent scoring, a consensus step with a written rationale, and the price comparison. RFP versus IFB compares the two formal methods in more depth.

The A/E exception

Price may be excluded as a selection factor only for architectural and engineering services. Under 2 CFR 200.320(b)(2)(iv), qualifications-based selection evaluates qualifications, selects the most qualified offeror, and then negotiates fair and reasonable compensation. That method "can only be used to procure architectural/engineering (A/E) professional services." Federal policy under the Brooks Act (40 U.S.C. 1101) is similar. Many states have their own QBS statutes; check your state's law.

Competition rules that sit beside the methods

Method choice does not replace the competition requirements in 2 CFR 200.319, which calls for full and open competition. The pre-2024 text of 200.319 also barred state and local geographic preferences in most cases; the current text no longer contains that paragraph. Program statutes, your award terms or state law may still limit local preferences, so check them before using one.

A related point is that contractors who develop or draft specifications, requirements, statements of work or invitations for bids must be excluded from competing on those procurements (2 CFR 200.319(b)). If a consultant helped write your RFP, note that in the file and check whether the exclusion applies before inviting them to propose.

Conflicts of interest also bear on every method. Under 2 CFR 200.318(c), no employee, officer, agent or board member with a real or apparent conflict may take part in the selection, award or administration of a contract supported by the federal award. 2 CFR 200.318 also requires written standards of conduct and awards only to responsible contractors.

Noncompetitive procurement

Noncompetitive procurement is the exception, not a shortcut. Under 2 CFR 200.320(c), it may only be used in one of five circumstances:

• the purchase does not exceed the micro-purchase threshold;
• it can only be fulfilled by a single source;
• a public exigency or emergency will not permit the delay of a public competitive notice;
• the entity asks in writing to use a noncompetitive method, and the federal agency or pass-through entity gives written approval;
• after soliciting several sources, competition is determined inadequate.

Whichever circumstance you rely on, the file should name it and explain why it applies. A sole-source claim with no market research behind it is hard to defend. See sole source justification under a federal grant for what a justification file usually contains.

What to record when you pick a method

Method selection is a dated decision, so the record should read like one. 2 CFR 200.318(i) requires records showing the history of each procurement, with four elements: the rationale for the procurement method, the contract type selection, contractor selection or rejection, and the basis for the contract price. The first element is the one this article covers.

A short method rationale per procurement might include:

• the estimated value and how you arrived at it;
• the threshold you compared it against, with its citation and effective date;
• whether a local or state threshold is lower, and which governs;
• the method chosen and the reason it fits;
• who made the call and when;
• whether the awarding agency or pass-through entity was consulted.

The effective date matters because thresholds move. The FAR amounts changed on October 1, 2025, under a statute (41 U.S.C. 1908) that requires statutory acquisition-related thresholds to be adjusted for inflation every five years. A file that does not record the rule and its effective date cannot show which rule it followed at the time.

Rules may move again. On May 29, 2026, OMB published a proposed rule, "Regulation for Federal Financial Assistance" (91 FR 32198), that would revise 2 CFR Part 200 again. It is proposed, not final: as of October 2026 the Federal Register shows no final rule, so check federalregister.gov and confirm the current status with your awarding agency or pass-through entity before changing your procedures.

Because retention and review follow the award, keep the method rationale where the whole file will be kept. Under 2 CFR 200.334, the default retention period is three years from the final financial report unless an exception applies, and local public-records rules may require longer.

Putting the rationale in front of the next reviewer

Start with your written procurement procedures (2 CFR 200.318(a)). Check that they name current thresholds, use current terminology and say who approves a method choice. Then add a one-page method rationale to each procurement file, dated and signed.

Many small issuers rebuild this page for every solicitation. A structured worksheet keeps the fields consistent. The Procurement Method Selector workbook is designed to record the threshold comparison, the method chosen and the rule version with its effective date. It is available now on its store page. A procurement methods and thresholds chart is a useful companion reference.

The RFPManagement evaluation workspace is built with a procurement-method selector that is designed to show the rule in force with its citation and effective date, followed by a human confirmation step. If you want to hear when it opens, join the waitlist. Plans are described at /pricing.

RFPManagement records and computes. It does not give legal or procurement advice. The award decision stays with your organization.