The Office of Management and Budget (OMB) released the issuance of the 2024 revisions to the Uniform Guidance (2 CFR Part 200). The Uniform Guidance consists of administrative requirements, cost principles, and audit requirements for federal awards. The 2024–2026 Uniform Guidance revisions represent the most substantial update to federal grant regulations since their inception in 2014. These changes are designed to shift the focus from administrative compliance to program outcomes but also introduced more rigorous documentation and oversight requirements for procurement and subrecipient monitoring.
Implementation Timeline
The revised guidance became fully effective for all new federal awards issued on or after October 1, 2024. Throughout 2025 and 2026, grant recipients have been navigating a “dual compliance” environment where older awards continue under previous rules while new ones follow the 2024 revisions.
Key Threshold Increases
Several financial limits were raised to reduce administrative burden for recipients:
- Single Audit Threshold: Increased from $750,000 to $1,000,000 in federal expenditures. (§ 200.501)
- Equipment/Supplies Threshold: The per-unit capitalization threshold for equipment and unused supplies increased from $5,000 to $10,000. (§ 200.313, § 200.314)
- De Minimis Indirect Cost Rate: The default rate for entities without a negotiated rate increased from 10% to 15%. The 15% rate applies to new awards issued on or after October 1, 2024. It cannot be applied retroactively to costs incurred before this date unless an existing award is formally amended. (§ 200.414)
- Subaward Threshold: The amount of a subaward that can be included in the Modified Total Direct Cost (MTDC) base increased from $25,000 to $50,000. (§ 200.1)
- Fixed Amount Subawards: The limit for fixed amount subawards increased from $250,000 to $500,000. (§ 200.333)
Stricter Procurement Standards
Although some limits increased, the 2024 and 2025 updates require more robust internal justifications and specific policy updates for all entities.
- Mandatory Price/Cost Justification for All Methods: Even for micro-purchases (now capped at $15,000 for awards after Oct. 1, 2025), recipients must now maintain documented research—such as screenshots, catalog prices, or purchase history—to prove price reasonableness when they do not solicit competitive quotes. (§ 200.320)
- Inclusion of Veteran-Owned Businesses: The list of “affirmative steps” for small and minority-owned business contracting (2 CFR 200.321) was expanded to include veteran-owned businesses, requiring entities to update their internal procurement policies to include this preference.
- Sustainable Procurement Guidelines: A new focus on sustainability encourages recipients to prioritize products that are reusable, refurbished, or recycled (consistent with Executive Order 14057) to the greatest extent practicable. (§ 200.323)
- Standardization for Tribes: Indian Tribes are now held to the same standard as States, meaning they must follow their own non-federal procurement policies or, if none exist, strictly adhere to federal standards.
Enhanced Subrecipient Monitoring (§ 200.332)
Pass-through entities (PTEs) must now implement more specific oversight mechanisms to ensure subrecipient compliance.
- Required Risk Assessments: PTEs must now conduct and document formal risk assessments for every subrecipient, evaluating factors such as financial stability, performance history, and capacity before making an award.
- Whistleblower Protection Notifications: Recipients and subrecipients are now required to inform all employees in writing of their whistleblower rights and protections under 2 CFR 200.217.
- Prompt Disclosure of Violations: The standard for reporting federal violations was tightened from “in a timely manner” to “promptly” once “credible evidence” of fraud, bribery, or gratuity violations is found. (§ 200.113)
- Mandatory Cybersecurity Measures: New language explicitly requires recipients and subrecipients to take “reasonable cybersecurity and other measures” to safeguard sensitive information. (§ 200.303(e)) & (§ 200.206)
- Follow-Up on Audit Findings: PTEs must now issue a management decision on subrecipient audit findings within six months and ensure subrecipients take “timely and appropriate corrective action”.
To update procurement policies for the 2024–2026 Uniform Guidance revisions, grant recipients must align their internal manuals with significantly higher financial thresholds and new procedural mandates.
- Adjust Financial Thresholds in Internal Policies
Update all written procurement procedures to reflect new federal limits effective for grant awards issued on or after October 1, 2024:
- Micro-Purchase Threshold (MPT): Increase the default limit from $10,000 to $15,000 for awards issued after October 1, 2025.
- Simplified Acquisition Threshold (SAT): Raise the threshold for informal procurement from $250,000 to $350,000.
- Equipment Capitalization: Update the definition of “equipment” to items with a per-unit cost of $10,000 or more (previously $5,000). Please note that if your internal capitalization policy remains $5,000, you must configure the system to still track federally funded items between $5,000 and $10,000 for compliance, even if they are not capitalized.
- Fixed Amount Subawards: Increase the cap for these subawards from $250,000 to $500,000.
- Update Mandatory Procurement Procedures
Revise specific sections of the procurement manual to comply with new administrative requirements:
- Documentation for Micro-purchases: Update language to require documented research (e.g., price history or catalog checks) to justify “price reasonableness” even when not soliciting competitive quotes.
- Geographic Preferences: Remove any absolute prohibitions on geographic preferences; the new guidance allows scoring mechanisms that reward contractors for local economic benefits, provided they comply with federal law.
- Sustainable Procurement: Formally integrate a preference for “sustainable procurement,” prioritizing products that are reused, refurbished, recycled, or energy-efficient whenever feasible.
- Diversity in Contracting: Explicitly include “veteran-owned businesses” alongside small, minority, and women-owned businesses in your outreach and affirmative steps for contract solicitation.
- Strengthen Oversight & Compliance Terms
- Whistleblower Notifications: Add a policy requiring written notification to all employees regarding their whistleblower rights and protections under 2 CFR 200.217.
- Mandatory Cybersecurity: Incorporate a requirement to take “reasonable cybersecurity and other measures” to protect sensitive award-related information.
- Violation Disclosures: Tighten the “Mandatory Disclosure” policy to require prompt reporting once “credible evidence” of fraud or conflict of interest is found.
- Implementation Steps for 2026
- Dual-Policy Management: Maintain a “crosswalk” or separate documentation to identify which version of the Uniform Guidance (pre-2024 or post-2024) applies to each active award, as older awards may still follow previous thresholds unless formally amended.
- Internal Training: Conduct sessions for procurement and grant management staff to ensure they are using the correct 2026 thresholds for all new requisitions.
- Update Financial Systems: Reconfigure your accounting systems to trigger correct approval workflows based on the new limits. Add a mandatory checkbox in the “Vendor Selection” phase for formal bids to confirm that “Affirmative Steps” included outreach to veteran-owned businesses.
Policy Implementation Deadlines
While federal law sets the above dates, grant recipients must update their internal documents to make these changes operational:
- Fiscal Year Alignment: Financial and cost changes requiring internal policy updates (like equipment thresholds) are effective for the grant recipient’s first fiscal year starting on or after October 1, 2024.
- Example: If your fiscal year begins on July 1, the new thresholds for equipment and supplies must be reflected in your policies for FY 2026 (starting July 1, 2025).
- Internal Decisions: Grantee grant recipients must make formal internal decisions and update policy documents before the new thresholds can be legally applied to their operations.
Sincerely,
D’ARCANGELO & CO., LLP
