FAR Update: Simplified Acquisition Threshold and Micro-Purchase Threshold are Going Up

The Simplified Acquisition Threshold and Micro-Purchase Threshold are officially increasing under the FAR. While various agencies had already increased the thresholds through deviations, this change will officially update the rules in the FAR. Although this may seem like a minor update, it will cause changes across the federal contracting landscape and will result in more contracts being issued under the Micro-Purchase and Simplified Acquisition Thresholds.

On October 2, the DoD, GSA, and NASA issued a proposed rule that would amend the FAR to increase the Micro-Purchase Threshold and Simplified Acquisition Threshold, as well as make certain changes to other portions of the FAR to align with these increases. These changes have been a long time coming. Both the 2017 Fiscal Year NDAA and 2018 Fiscal Year NDAA requested these threshold increases.

Many agencies had not waited this long to implement the changes. In February 2018, Civilian Agency Acquisition Council authorized civilian agencies to issue class deviations to raise the Simplified Acquisition Threshold and Micro-Purchase Threshold to the amounts in the current proposed FAR rule. GSA, for one, increased both thresholds in March 2018. And the DoD raised the thresholds in a deviation back in fall 2018.

The proposed rule released by the DoD, GSA, and NASA would implement the following changes to the purchase thresholds:

  • The Micro-Purchase Threshold would be increased from $3,500 to $10,000.
  • The Simplified Acquisition Threshold would be increased from $150,000 to $250,000

To reflect this, multiple changes will be made to the FAR to replace the current threshold limits with the proposed limits, and ensure proper references are made to the new thresholds. The proposed rule will also replace any non-statutory, stated dollar thresholds that are intended to correspond with the Micro-Purchase and Simplified Acquisition Thresholds.

These changes will have a big impact, per the expected impact calculations found in the proposed rule. The agencies found that from 2015 through 2018 there were $2,442,317 worth of small business contracts, and $1,359,916 worth of other than small contracts, that would fall under the proposed Micro-Purchase Threshold, but not apply to the current Micro-Purchase Threshold. Also, from 2015-2018 there were $300,073,039 worth of small business contracts, and $161,715,144 other than small contracts, that would fall under the proposed Simplified Acquisition Threshold, but not fall under the current Simplified Acquisition Threshold.

There are some limitations to how these figures were compiled: it just used figures from FPDS, and commercial item awards as well as orders placed through indefinite quantity contracts orders, and other large contracting schedule orders, were not included in these calculations. Plus, this calculation apparently did not account for the fact that many agencies were already using the increased thresholds.

The agencies estimate that these changes would allow more contracts to be awarded under the Micro-Purchase and Simplified Acquisition Thresholds. This would mean more contracts would be awarded without burdensome regulations, creating faster, more streamlined acquisition opportunities for contractors. The proposed changes also apply to contracts for commercial items, including COTS items, but will not add any new solicitation provisions or contract clauses to procurements.

The DoD, GSA, and NASA are inviting contractors to provide comments on the proposed rule changing the Micro-Purchase and Simplified Acquisition thresholds. The comments are due on or before December 2. Stay tuned to SmallGovCon for updates on these proposed changes.