2 CFR 200.318, explained in plain English

Why this is the section that matters more

It is easy to read the thresholds at §200.320, find that almost everything they buy sits under the micro-purchase line, and conclude procurement is handled. It is not. §200.318, part of the Uniform Guidance, has no dollar floor.

What each paragraph requires, (a) to (l)

Here's the whole section in order. Most paragraphs are duties. Paragraphs (e), (f) and (g) only encourage, and paragraph (l) lists what the rules allow.

• (a) Documented procurement procedures. Your own, written down and actually used, consistent with state, local and tribal law and the standards in §§200.317 through 200.327. Not the funder's, not a template you downloaded and never adopted.
• (b) Oversight of contractors. Make sure contractors perform to the terms of their contracts or purchase orders. Buying is not the end of it.
• (c) Conflicts of interest. Under (c)(1), you keep a written standard of conduct covering employees engaged in the selection, award and administration of contracts, and nobody with a real or apparent conflict takes part. Under (c)(2), if your organization has a parent, affiliate or subsidiary that is not a state, local government or Indian Tribe, the standard must also cover organizational conflicts.
• (d) No unnecessary or duplicative items. Your procedures must keep you from buying what you don't need. Think about combining or splitting purchases to get a better price and, when it fits, compare leasing with buying.
• (e) Strategic sourcing. You're encouraged to share purchasing arrangements with other entities for common goods and services. Documented actions of this type meet the competition requirements.
• (f) Excess and surplus federal property. You're encouraged to use it instead of buying new when that's feasible and cuts project costs.
• (g) Value engineering clauses. You're encouraged to use them when practical on construction contracts large enough to offer real savings.
• (h) Responsible contractors. Award contracts only to contractors who can do the work. You must consider integrity, public policy compliance, proper classification of employees, past performance, and financial and technical resources.
• (i) Procurement records. Keep enough to detail the history of each purchase. That includes why you chose the method and contract type, who you selected or rejected, and the basis for the price.
• (j) Time-and-materials contracts. Use one only after you determine that no other contract fits, and only with a ceiling price the contractor exceeds at its own risk. These contracts also call for a high degree of oversight.
• (k) Settling issues. Disputes, protests and claims from your purchases are yours to settle, and you must report violations of law to the right authority.
• (l) Labor and employment practices. The procurement standards don't prohibit practices such as project labor agreements or certain hiring preferences, as long as they're consistent with the Constitution, federal law, the program's purposes and the rest of Part 200.

The conflict of interest standard is the one to write today

It is a page. It names who it applies to: employees, officers, agents and board members. It defines a conflict to include financial interest and the interests of family, partners and prospective employers. It carries the prohibition as the rule writes it. None of those people may solicit or accept gratuities, favors, or anything of monetary value from contractors. And it states the disciplinary consequence for violating it.

One thing to get right, because a copied policy can get it wrong: the flat ban is the rule. The section then lets your organization choose to set standards for cases where a financial interest is not substantial or a gift is an unsolicited item of nominal value. That carve-out is yours to adopt or not, and it is not a threshold built into the regulation. If your policy says small gifts are fine because the rule allows it, your policy is describing a choice you made as though it were the law.

Start from our conflict of interest policy template, then add the procurement points on this page.

The IRS asks about this too. Form 990, Part VI, line 12a asks whether you had a written conflict of interest policy at the end of your tax year. If that return is coming up, here's the Form 990 deadline for your year end.

Common slips, and the fix

• No written procedures at all, on the theory that the thresholds excuse them. They do not.
• A board member's company doing the work with nothing in the file showing how that was handled.
• Verbal quotes. The price was reasonable and nobody can now show it was.
• Buying from a sole source out of habit rather than after a documented determination.

This is general information, not legal or accounting advice. Federal grant rules change and are applied differently by different agencies and auditors. Check with your auditor, your grant officer, or an attorney before relying on any of it.

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Sources: 2 CFR Part 200 (eCFR), read 1 September 2026 and re-checked 30 October 2026; Instructions for Form 990 (2025), Part VI, line 12a. Federal grant rules change; check the current text before relying on this.