Finalized Increases to Micro-Purchase, Simplified Acquisition, and Other Thresholds

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Last year, we noted that the FAR Council (DoD, GSA, and NASA) issued a proposed rule to adjust the statutory acquisition thresholds for inflation. Under 41 U.S.C. § 1908, the federal government must adjust these thresholds every five years to account for inflation. Effective October 1, 2025, the updated thresholds have gone into effect. In this post, we’ll look at the new thresholds.

The finalized rule, issued on August 27, 2025, mostly matches the proposed rule from 2024, although there are some differences.

  • The Micro-Purchase Threshold has been increased from $10,000 to $15,000.
  • The Simplified Acquisition Threshold has been increased from $250,000 to $350,000. Both the Micro-Purchase and Simplified Acquisition Thresholds can be found in FAR 2.101.
  • The threshold at FAR 6.204(b) for requiring a separate justification or determination when a contracting officer wants to sole source eligible 8(a) awards has been increased from $25 million to $30 million (mainly impacting entity-owned 8(a) companies). Note that the FAR Council erroneously described the threshold in the proposed rule as the threshold for limiting competition to eligible 8(a) awards in general. That is not what the threshold in question is, this threshold only speaks to the requirement that the contracting officer make a separate justification if he or she wishes to make such a sole source award.
  • Approval thresholds for using other than full and open competition (FAR 6.304) have been increased from $750,000 to $900,000. Note, this is lower than the original proposed figure of $950,000. Apparently, the FAR Council’s calculations did not support a further increase beyond $900,000.
  • The ceiling for simplified procedures for certain commercial products and commercial services under FAR 13.500 was increased from $7.5 million to $9 million. Again, like the approval thresholds for using other than full and open competition, this is lower than the original proposed figure, which was $9.5 million.
  • The prime contractor subcontracting plan (FAR 19.702) floor increased from $750,000 to $900,000. The story is similar to the thresholds for other than full and open competition and the simplified procedures threshold, this is lower than the original proposed figure of $950,000.
  • 8(a) sole source authority under FAR 19.805-1 increased from $4.5 to $5.5 million for most acquisitions and from $7 million to $8.5 million for manufacturing acquisitions. This would impact potentially many 8(a) Participants.
  • The threshold for cost or pricing data at FAR 15.403-4, for contracts awarded before July 1, 2018, increased from $750,0000 to $950,000. This was actually an increase from the proposed rule and was based on public comment.  For contracts issued after that July 1, 2018, the threshold has been increased from $2 million to $2.5 million.

In discussing its basis for its decisions, the FAR Council observed that while it normally would use the March Consumer Price Index (CPI) to calculate the update, the actual March CPI was lower than initially expected, while the April CPI more accurately reflected inflation and was available to the council when it made its decision. As such, it used the April CPI.

As might be expected, the FAR Council anticipates that the increases to the Micro-Purchase and Simplified Acquisition Thresholds will likely have the biggest impact on federal contracting. From FY 2022 through 2024, there were, on average, over 560,000 federal awards valued at or below the old Micro-Purchase Threshold of $10,000, issued to about 18,000 separate companies. Another 50,000 awards would have fallen into this category had the new threshold of $15,000 applied. As for awards above the old Micro-Purchase threshold but below the old Simplified Acquisition Threshold, there were about 230,000 such awards at any given time from FY 2022 through 2024. With the changes to the Simplified Acquisition Threshold, approximately 5,000 more contract awards would have fallen into that category.

This is important for small businesses. Purchases “above the micro-purchase threshold, but not over the simplified acquisition threshold, shall be set aside for small businesses” if there are two or more small business offerors expected to compete. FAR 19.502-2. That’s 5,000 more awards that could have been set aside for small businesses (assuming there were two or more available to perform the work in question).

Overall, the changes are nothing terribly unexpected. The thresholds are to increase based on inflation every five years, and that’s what the FAR Council has done using the CPI. But it’s still important. If you perform a lot of contracts that have values in these ranges, things might have just shifted greatly for you.

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