2.1 Intergovernmental Standards & Federal Grant Compliance

Federal assistance: identify the applicable rules first

A state or local entity buying with federal assistance remains responsible for its own purchasing authority and for the terms of its award. The Federal Acquisition Regulation (FAR) governs direct federal acquisitions; it is not automatically the procurement code for a municipal grant recipient. 2 CFR Part 200 provides government-wide assistance rules, supplemented by program statutes, agency implementation, award conditions, and applicable state or local law.

Before choosing a method, identify the funding source, recipient type, award date, applicable version of the rules, and any program-specific conditions. The 2024 Uniform Guidance revisions generally took effect October 1, 2024; an older award can retain older terms. A buyer cannot select whichever version is more convenient. Record the grant officer's direction when applicability is unclear.

Under 200.317, states and Indian Tribes follow the procurement policies they use for non-federal funds while also complying with the specifically listed federal provisions. Other recipients and subrecipients use the procurement standards in 200.318–200.327. Do not assume that a city, university, state, and Tribe have identical procedural obligations. All must meet the requirements applicable to their award.

Competition, conflicts, and geographic preferences

The current 200.319 requires full and open competition. Examples of restrictions include unreasonable qualification conditions, excessive bonding, organizational conflicts, arbitrary actions, and brand-name-only descriptions that exclude suitable equivalents. Contractors that develop or draft specifications, requirements, statements of work, or invitations for bids must be excluded from competing on those procurements under that provision. Ordinary market research and review of a public draft are not automatically the same as developing the specifications.

The 2024 revision removed the former general geographic-preference prohibition from 200.319. It did not authorize every local preference. Check the Constitution, program statutes, other regulations, award terms, state law, and published evaluation rules before using a geographic factor. For an older award, verify whether the former rule still governs. A transit grant, a nutrition grant, and a locally funded contract can have different restrictions.

A useful file records the proposed preference, its legal authority, applicability of the current or older award terms, effect on competition, and counsel or grant-agency review. Never infer either automatic permission or automatic prohibition simply from the phrase “federal funds.”

Current thresholds and procurement methods

The ordinary FAR micro-purchase threshold increased to $15,000 and the simplified acquisition threshold to $350,000, effective October 1, 2025. Part 200 definitions refer to the FAR thresholds. Special statutory exceptions and lower entity thresholds may apply. Under 200.320, an eligible recipient can establish a higher micro-purchase threshold using the prescribed annual self-certification process up to $50,000, or obtain approval above that amount. Retain the supporting determination; do not assume that every agency has elected the higher limit.

Section 200.320(c) contains five conditions, including a transaction not exceeding the micro-purchase threshold; availability from only one source; an exigency or emergency that prevents competitive delay; written authorization by the federal agency or pass-through entity in response to a request; or inadequate competition after soliciting several sources. A preferred incumbent or an expiring budget alone does not establish one of the exceptions.

Domestic sourcing and labor: determine coverage separately

Buy American rules for direct federal purchasing, agency-specific Buy America statutes for assistance, and the Build America, Buy America Act (BABA) are distinct. BABA applies a domestic-content preference to covered infrastructure assistance, subject to its implementation rules, award terms, and approved waivers. Evaluate whether an item is iron or steel, a manufactured product, or a construction material; those categories have different production tests. Under the general 2 CFR Part 184 definition, a manufactured product is manufactured in the United States and has greater than 55% domestic component cost unless another applicable standard controls. A supplier's U.S. address is not proof of domestic production.

The buyer should obtain the required product certifications, preserve traceability, and identify a waiver before ordering a noncompliant item. Public-interest, nonavailability, and unreasonable-cost waivers are agency determinations, not unilateral buyer exceptions. Do not treat an eligible waiver request as an approved waiver.

The Davis-Bacon Act covers qualifying direct federal or District of Columbia construction contracts exceeding $2,000. Federally assisted construction is covered when the relevant Davis-Bacon Related Act applies. Federal funding alone does not establish coverage for every project. For covered work, include the applicable wage determination and required clauses, monitor classifications and fringe benefits, and obtain weekly certified payrolls. WH-347 is an optional federal form for furnishing the required payroll information and compliance statement.

The Service Contract Act generally applies to covered service contracts exceeding $2,500 entered into by the federal government or District of Columbia. A municipal service contract does not become SCA-covered merely because it uses grant money. State prevailing-wage laws and other program conditions require separate review.

Worked compliance decision

A city plans a grant-funded pumping station and proposes a 5% local-bidder preference. The buyer first identifies the award's governing version, program rules, and local authority. If a controlling rule prohibits the preference, it cannot be applied. If it is legally permitted and included in the published method, apply that method consistently; do not introduce a preference after opening. Separately verify BABA and wage coverage, required contract clauses, bonding, and the price-analysis requirement. No single label—“EPA grant,” “local vendor,” or “construction”—answers every compliance question.

Sources checked October 20, 2026: Part 200, OMB 2024 changes, threshold effective dates, and DOL coverage.