By Richard Speights, PTAC Counselor at UNC-Charlotte
The Federal Government is the premiere marketplace for small and large businesses, annually awarding purchasing and contracting transactions (contracts, purchase orders, etc.) valued at over $500 billion. Although a large portion of those dollars are spent to buy big ticket items such as ships, airplanes, missiles, etc., multi-billions of dollars are spent on lower value items that are well within the reach of most small to medium size businesses. Procurement professionals representing federal agencies utilize a maze of rules and regulations to accomplish these purchases. Suppliers and contractors who are unaware of how to effectively navigate this maze often give up in frustration, losing out on numerous contracting opportunities.
Navigating this maze begins with understanding the terminology used by federal contracting officers, particularly “Procurement Thresholds”. The federal government utilizes procurement thresholds amongst other requirements to define the limits on the dollar value of transactions, methods of purchase and the level of competition required. The “Micro-Purchase” threshold governs purchases that are expected to be at or below $3,000. In this range, competition is not required and the purchase can be made to either a small business or large business with no restrictions. However, the preferred method of purchase is with the “government wide purchase card”. A strategic question is, is my business equipped to accept the purchase card as a method of payment? The majority of users of these cards are government employees and not contracting professionals. To take advantage of micro-purchases, it is paramount to get to know who these cardholders are and what they buy. Purchases between $3,000 and $10,000 require competition consisting of at least two quotes and no formal advertisements. For effective marketing, it is critical for small businesses to be included on agency internal mailing lists as well as being included in the SBA’s Small Dynamic Business Search database. Between $10,000 and less than $25,000, competition and limited advertisements are required. Once a requirement reaches the value of $25,000, formal advertisement is required in the government’s “Single Point of Entry”, the FedBizOpps (www.fbo.gov) database. To best utilize FedBizOpps, a “Search agent” should be set up to conduct customized searches and provide electronic notification of those opportunities that met the search criteria. All procurements below $150,000, the Simplified Acquisition Threshold (SAP) are reserved by federal procurement regulations for small businesses. A business is determined to be small or large based on the SBA size standards.
Without a full understanding of these thresholds a business may find itself discouraged, distraught and confused by why “I am never contacted to submit a bid” or why “my competitor was able to bid and I never saw the solicitation”.
Don’t hesitate to call on the procurement professionals at the NC Procurement Technical Assistance Program (www.sbtdc.org/ptac) to obtain valuable assistance with navigating this maze.